TRI - Thomson Reuters dips as analysts move to sidelines after stock's strong run

2023-05-03 10:23:54 ET

Thomson Reuters ( NYSE: TRI ) was 3.5% lower Wednesday, a second day down after earnings that largely beat expectations but also dialed back expectations for full-year revenues.

The decline came amid a pair of downgrades from firms hitting the sidelines after some solid recent outperformance by the stock.

Canaccord cut its rating on Thomson Reuters ( TRI ) to Hold from Buy, seeing positives "largely baked in."

"Despite a backdrop of slowing macro conditions and some lengthening in sales cycles, we believe the Q1 result and comments on the call (including indications around Q2) are supportive of meeting full-year expectations," analyst Aravinda Galappatthige said.

The company can also generate more revenue growth by "pulling on its price lever" both short and medium term, Galappatthige said.

It's facing tougher comps and has seen a "sustained upswing" in share price, though -- TRI has risen 22% over six months -- and can't justify a Buy rating any longer, the analyst said.

Scotiabank also downgraded due to valuation, cutting Thomson Reuters to Sector Perform. The shares have performed "exceptionally well" vs. the market "for good reason as management continues to deliver strong and steady results with focus on FCF generation in addition to returning significant cash to shareholders at the same time," analyst Maher Yaghi said.

"It's always hard to downgrade the stock of a company that is performing well," but with TRI trading at high multiples "we think it is best to wait for a better entry point."

For more detail, dig into Seeking Alpha's transcript of Thomson Reuters' earnings call .

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