A day after it was revealed Warren Buffett had bought one of Nick Train’s favourite stocks, there’s fresh news from a trio of blue-chip companies all owned by the UK star investor.
The path to a 20% upside for London Stock Exchange (LSE:LSEG) shares was highlighted today after leading investors offloaded a £2.7 billion stake during a well-supported placing.
UBS said the disposal by the Blackstone-led consortium as it begins to unwind the LSE holding taken as part of the sale of data business Refinitiv, removed an overhang for shares.
Reiterating its “buy” recommendation and a 9,800p price target, the Swiss bank noted that the first placing by the consortium in March was followed by a 12.5% rise for LSE shares.
The investors, including Thomson Reuters, had originally intended to offload a 5.1% stake of 28 million shares in last night’s placing but this was increased to 33 million.
UBS added today: “We expect the strength of the recent placement to serve as a positive catalyst for the shares.”
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Shares fell 346p to 8,126p due to the placing taking place at a 5% discount to last night’s closing price at 8,050p. However, this compares with 7,150p seen in March.
The lock-up agreements on the remaining 55 million and 45 million shares held by the consortium are set to expire in January 2024 and 2025 respectively. However, UBS believes concerns over these future placements are likely to diminish after 61 million of this year’s 66 million unlocked shares were successfully placed.
It believes this will especially be the case if London Stock Exchange continues to execute on its Refinitiv growth strategies.
The bank added: “We think the effective removal of the share overhang for the remainder of 2023 should help LSEG’s shares to break out from their two-year £65-£85 range.”
This potential boosts the outlook for Finsbury Growth & Income (LSE:FGT) trust, given that LSE is the third-largest investment, accounting for 10.6% of the portfolio.
Two other top 10 holdings in the Nick Train-managed investment trust were in the spotlight today as business software group Sage Group (The) (LSE:SGE) and credit checking firm Experian (LSE:EXPN) posted results.
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Sage shares led the FTSE 100 index risers board after its half-year earnings of £227 million came in 5% ahead of the City consensus and 14% higher than last year.
The strong performance of Sage Business Cloud now means the company expects organic recurring revenue growth to be around 11% for the September financial year, up from at least 9.4% in previous guidance.
Chief executive Steve Hare said investments in technology including AI-powered services, as well as in sales and marketing, drove the strong performance. He added: “Small and mid-sized businesses are continuing to digitise, despite the macroeconomic uncertainty.”
The update lifted Sage shares up 30p to a 52-week high of 851p, compared with less than 600p just under a year ago.
Experian’s full-year results were largely in line with the City consensus, including organic revenues growth of 7%. The company expects a slower rate of between 4-6% in the current financial year as the recent tightening of credit supply affects some of its core businesses.
However, Bank of America believes Experian’s countercyclical products such as in consumer subscriptions will partially offset the credit headwinds. It is also encouraged by solid growth momentum with some of Experian's new and scaling products.
Shares fell 70p to 2,670p but Bank of America analysts still see the potential to reach 3,700p after revising their price target with a 5% cut in the wake of today’s results.
The bank said: “Despite downward revisions to our forecasts, we continue to see attractive upside potential as Experian's organic growth troughs in the 2023/24 financial year and returns to high-single-digit/low-double-digit thereafter.”
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