Three reasons to buy Relx shares

Credit: Relx.

The AI noise behind the abrupt de-rating of RELX (LSE:REL) shares has been questioned after three leading City banks highlighted compelling long-term value and big share price upsides.

Bank of America, which recently named the data and analytics services business as one of its 25 stocks for 2026, said a multiple of 14 times 2026 earnings was disconnected from the company’s improving fundamentals.

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It referred to the growth, margin and share buyback trends in this month’s annual results and asked: “Is this what disruption looks like?” 

The impact of the peer group de-rating means the bank’s price target has come down from 4,500p to 3,700p, but this still represents an 80% upside.

BofA adds that when valuation multiples were last this low in 2013, Relx growth was 3% rather than the 8% forecast for this year. A better-than-expected £2.25 billion buyback is also set to return about 10% of market capitalisation this year, with the potential for nearly a third over the next three years.

The bank points out that Relx is trading at a 20% discount to US info services peers and a 17% discount to Thomson Reuters Corp (TSE:TRI), despite achieving faster top-line growth in its Legal division.

The biggest parts of Relx are its Risk and Business Analytics division and the Elsevier journals operation Science, Technical and Medical (STM). Legal is the group’s third-largest division, with the smallest being the Exhibitions arm.

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The BofA analysis also highlighted the company’s track record of innovation: “Markets view Relx as potentially at risk from AI innovation. Yet, in many cases Relx has led the industry in utilising technologies like AI to enhance the value of its products. 

“In some respects, Relx is a ‘play’ on technology as it takes new innovations like generative AI and applies them to its information sets, and it has been early to recognise the potential of new technologies.

“For example, it unveiled Lexis+ AI, its generative AI-enabled legal research platform, as early as May 2023, making it the first major legal research provider to do so.”

Relx has been one of the best-returning FTSE 100 stocks of the past four decades but shares have fallen from last August’s 3,700p after confidence in the sector was shaken by the weak full-year revenues guidance of business information provider Gartner Inc (NYSE:IT).

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Sentiment took a further hit earlier this month when Anthropic launched an AI-driven legal tech services tool.

UBS has cut its price target by 20% to 3,600p but reiterated its Buy rating after welcoming the “calm and confident” tone of management alongside solid annual results.

The bank said: “A recovery in sentiment will ultimately take time, but we continue to believe that Relx’s operations are secure and the business will continue to deliver solid underlying performance.”

Deutsche Bank cut its price target to 3,050p in order to reflect the peer group de-rating but said that it sees “compelling long-term value” post the recent AI-led share price weakness.

The bank said management had reinforced the proprietary data and content messaging that makes Relx tough to displace. It added that Relx is also well positioned to leverage that data, scale and long-standing technology and automation experience with new AI tools and services.

The ability to maximise long-term shareholder returns in the face of near-term market concerns was highlighted by an increased share buyback programme and consistent high-single digit dividend growth, the bank added.

Graeme Evans owns Relx shares