Credit Suisse hikes target price for LSE

Analysts at Credit Suisse boosted their target price on shares of the London Stock Exchange Group, reflecting the company's recent stock buyback and acquisitions.

Following the group's Investor Day held the day before, Credit Suisse also said it was now more confident of the longer-term growth prospects for LSE's index and over-the-counter clearing businesses.

As expected, the investment bank said, LSE had guided towards double-digit annual growth at the index unit, FTSE Russell, and in OTC clearing from 2017 to 2019.

Given the "supportive" structural growth drivers of those businesses and high barriers-to-entry, Credit Suisse modeled an annual rate of growth in revenues for 2017 to 2019 of between 10% to 12%.

LSE's £50.0m target for incremental cost savings was also slightly ahead of the between £20m to £30m which the broker had penciled in.

Credit Suisse also highlighted LSE's goal for EBITDA margins of roughly 55% by 2019.

That, they said, implied about 9% upside to its 2019 estimates if the exchange operator met its revenue projections.

The target price was raised from 3,100p to 3,600p and the recommendation kept at 'outperform'.