EUR 850.00 For Business Accounts Only

Morningstar | No Alarms and No Surprises for RELX in 3Q

Narrow-moat RELX’s nine-month trading update contained nothing in the way of surprises, with underlying revenue growth of 4%, bang in line with our expectations for the full year. The full-year outlook was also unchanged from earlier in the year. We do not expect to make any material changes to our forecasts on the back of these numbers, nor to our GBX 1,510 fair value estimate. We believe the shares are currently up with events.

Divisionally there were no real surprises, with the risk & business analytics and exhibitions divisions growing strongly, at 8% and 6%, respectively, on an underlying basis. Risk & business analytics continues to be driven by key products such as LexisNexis and Accuity, the latter of which provides tools to structurally growing areas such as financial crime and compliance. In RELX’s other two divisions--scientific, technical & medical and legal--growth in decision-making tools and databases continued to be weighed down by declining print businesses, resulting in underlying growth of just 2%.

Higher-value products such as decision-making tools not only differentiate RELX from smaller, less resourced peers, but also increase subscription-based revenue streams and client integration, ultimately creating a more stable, more predictable, and higher-margin business model. With a consistent capital expenditure/sales ratio of around 5% and further resources committed to small digital bolt-on acquisitions, we believe RELX should be able to retain its strong market position.