Investors bailing out of Thomson Reuters
Shares of Thomson Reuters Corp. (TRI), which boasts a market cap of about $25 billion, have recently started to sag on concerns the information data company is losing market share to privately-owned Bloomberg L.P. And some of the smart money that bought following the merger of Thomson and Reuters, which was completed in April 2008, is now bailing out of the stock.
One hedge fund manager, who requested anonymity, detects a streak of desperation in efforts to generate sales, including an advertising campaign in which Thomson Reuters engages in questionable claims of routinely besting Bloomberg in breaking market moving news on M&A deals, financings, etc. "Trying to sell new data and analytics contracts based on suspect advertising claims of beating Bloomberg at breaking market moving news stretches credulity," says the source.
Jeffrey Fan, who covers Thomson Reuters for UBS, has a sell recommendation on the stock and expects the company will report a decline in revenues for the second quarter when it reports in early August. Mr. Fan expects TRI earnings to decline to $1.71 a share in 2009 as compared to $1.91 in 2008. His price target on the shares, which recently traded at 30, is $23.50.