Morgan Stanley says these 3 global stocks will be winners in a world where data is king
Data is set to play a big role in creating new products and services while boosting productivity, and three companies are “well positioned” to be “winners,” according to Morgan Stanley . In an Oct. 9 research note, the bank’s analysts, led by George Webb, named British information and analytics player Relx , Dutch professional information and software solutions provider Wolters Kluwer and publishing and business intelligence platform Informa as three “high-quality businesses forming the foundations of the data economy.” These stocks were chosen for offering structural mid-single-digit percentage growth, high and durable margins (with adjusted earnings before interest and taxes exceeding 25%), and high cash conversion with strong market positions. The analysts see Relx and Wolters Kluwer benefiting from “clear opportunities” from generative artificial intelligence. Managing data and technology are core to both businesses. “Relx and Wolters combine proprietary data with large, multi-sourced datasets, and add further value through opinionated content, analytics, or workflow tools,” they wrote, adding that this “creates significant barriers to entry and we see new AI use cases as strengthening their moats over time.” Meanwhile, Morgan Stanley is less bullish about Informa’s prospects in generative AI, saying its opportunities in the area are less clear, given its role as an events organizer. However, the investment bank notes that its “digital transformation holds promise.” Relx and Wolters Kluwer The bank raised its forecasts for Relx and Wolters Kluwer, giving both an overweight rating. It now has a price target of £3,260 ($4,007.63) for Relx — giving it around 12% potential upside from its Oct. 4 close. Its price target for Wolters Kluwer is 142 euros ($150.59), or around 18% upside. Relx also trades on Nasdaq. “We defensively position in an uncertain macro. Relx and Wolters Kluwer represent safe ports in a storm. While there is a risk of concentrated investor positioning, our raised forecasts are above consensus, and we see the valuation re-ratings of the past few years as justified, given they are two of a relatively small group of low-cyclicality, high-quality compounders in Europe,” Morgan Stanley’s analysts wrote. REL-GB YTD mountain Year-to-date share price of RELX. For Relx, the analysts see “clear tangible market opportunity” from Lexis+ AI — a generative AI platform centered on legal work. It was developed by Relx’s subsidiary LexisNexis, which provides legal services. WKL-NL YTD mountain Year-to-date share price of Wolters Kluwer. They like Wolters Kluwer for its software business, which generates around 45% of its revenue. The bank said Relx and Wolters Kluwer share some of the positive qualities of European software companies, citing structural growth and high recurring revenue, among other factors. While the bank notes the two companies’ growth rates lag behind the European software sector, it considers the two stocks “less volatile” than the average European software company “by virtue of their scale and diversification.” Informa The bank is is equal-weighted on Informa, saying it is keeping a watch on it and will track its “digital drive with interest.” Morgan Stanley has a price target of £790 on the company – giving it an 8.5% upside from its Oct. 10 close. — CNBC’s Michael Bloom contributed to this report.
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