11:28 AM EDT, 05/24/2024 (MT Newswires) -- UBS has reiterated its Buy rating and US$190 target on Thomson Reuters ( TRI ) after hosting CEO Steve Hasker, CFO Mike Eastwood, + Head of IR Gary Bisbee.

"We continue to have confidence in Thomson's ability to execute its accelerating organic growth which should be enhanced as Gen AI initiatives scale." The analyst emphasizes a highly recurring business (+90%), low leverage (~0.7x), relatively recession-resistant model, amid expanding free cash flow.

AI revenue in H2 2024-Q1 2024 contributed to TRI's FY24 organic revenue growth boost. Gen AI driven revenues are poised to accelerate as products launch and ramp in H2 2024 with more meaningful contributions to revenue growth and retention in FY 2025. UBS also sees benefit to the extent Thomson leverages more of a platform approach as it consolidates Copilot, CoCounsel, and Westlaw AI legal assistant (launched last November) into a synchronized solution, ultimately serving as a legal assistant.

Thomson has typically improved retention ~20 bps annually (91% in FY23). This could accelerate, as the company offered a glimpse to ~94% retention citing its net promotor score (NPS) improvement as the greatest potential driver at its 2024 Investor Day, the company said.

Thomson Reuters ( TRI ) no longer holds any interest in LSEG after its sale of 4.3 million shares yielded pre-tax net proceeds of ~$500 million. This, coupled with $1.375 billion in gross proceeds from FY24 sales enhances an overcapitalized balance sheet.

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