Morningstar | Slow and Steady Wins the Race for RELX in 1Q
Narrow-moat RELX’s brief trading update confirmed that the first quarter has offered up no material surprises, with management confirming its full-year outlook. We maintain our forecasts and believe that organic revenue growth just north of 4%, combined with slight operating margin improvement over the course of 2019, is eminently achievable. We also reiterate our GBX 1,510 fair value estimate and believe that as concerns have waned over the threat to the journal business, the shares have once again become richly valued.In the quarter, the company completed five acquisitions for a total of GBP 236 million. This is in line with the almost GBP 1 billion spent over the course of 2018, in which the acquisition of risk-management platform ThreatMatrix for GBP 580 million was an outsize part. Bolt-on acquisitions have played an integral part in RELX’s strategy of moving up the value chain towards a base offering of decision-making tools. As the portfolio mix shifts towards this area, we believe that both the top-line growth rate and the operating margins achieved can move modestly but incrementally higher.
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