JPMorgan reiterates 'overweight' rating on Relx, raises legal growth expectations
Analysts at JPMorgan upgraded their legal growth expectations for to 10% per year in order to reflect a bigger total addressable market for Agentic AI.
JPMorgan said it had previously interpreted Relx's expectation for legal growth "to accelerate over the next decade" as growth accelerating from 7% to roughly 8-8.5% over the next three years.
However, JPM now believes the market opportunity to be "much more profound" than it had first anticipated, noting that it may have captured the upside from AI helping customers get more value from Lexis' existing information and tools, and the enhanced value from Protege's personalisation, but failed to capture the opportunity for Lexis to leverage Agentic AI to provide legal execution and drive a multiplication of its addressable market.
"We believe we have also underestimated the scope for AI to drive internal efficiencies and improve the return on product investment - AI not only expands the TAM but makes it easier for Lexis to address it with the faster and cheaper development of new products," said JPM.
"We upgrade our 10-year legal growth to 10% - and would be surprised if Lexis does not see periods of faster growth. An initial transactional model for Protégé modules could pull forward the acceleration."
JPM upgraded its legal valuation by another 20-25% and Relx's overall group valuation from 4,630.0p to 4,890.0p as it reiterated its 'overweight' rating on the stock.
Reporting by Iain Gilbert at Sharecast.com
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