RELX draws buy ratings from 2 analysts as AI fears ease

RELX PLC reported first-half underlying revenue growth of 6% to 10% across segments, prompting two analyst upgrades on Thursday.

"The results suggest AI worries look overplayed and that AI could accelerate growth rather than disrupt the business," a Deutsche Bank analyst said.

Deutsche Bank raised its price target to 3,100 pence from 3,050 pence, maintaining a buy rating. UBS reiterated its buy rating with a 3,600 pence target, implying roughly 47% upside from Wednesday's close of 2,451 pence.

The FTSE 100 information-services company has seen its shares fall sharply from their 2025 peak as investors feared generative AI would erode its wide economic moat. The first-half numbers challenge that narrative, with legal segment growth accelerating to 10% and scientific, technical and medical rising 6%, boosted by a 20% jump in article submissions and new AI products including Scopus AI and Leapspace.

Morningstar, which rates RELX at five stars with a fair value estimate of 4,200 pence, said the shares look "deeply undervalued." The research firm cited RELX's wide moat and said it will benefit from AI through enhanced product innovation rather than face disruption.

Risk segment growth held steady at 8%, while exhibitions posted strong revenue growth with improving margins. Management maintained 2026 guidance for strong underlying growth in revenue, earnings before interest and taxes, and earnings per share on a constant-currency basis.

The legal segment's double-digit growth was driven by law firms and corporate legal departments adopting AI tools such as Lexis+ with Protégé. In the scientific and medical division, Scopus AI and Leapspace are gaining traction as researchers submit 20% more articles year over year.

RELX shares have declined significantly from their 2025 peak after getting caught in a broad sell-off of information-services stocks triggered by Anthropic's debut of a legal AI plug-in in February. The sell-off also hit peers Thomson Reuters and Wolters Kluwer, as investors questioned whether generative AI would make traditional legal and scientific databases obsolete.

The first-half results provide the first concrete evidence that RELX's proprietary data sets and embedded AI tools are creating competitive advantages rather than vulnerabilities. With a wide moat rating from Morningstar and a fair value estimate nearly 70% above the current share price, the valuation gap suggests significant upside if the AI narrative continues to shift.

The analyst upgrades suggest the market may be reassessing the AI threat to traditional data and publishing companies. Investors will watch for further evidence of AI-driven product adoption in the second half, with the next catalyst being the full-year trading update expected early next year.

This article is for informational purposes only and does not constitute investment advice.