Shares in London Stock Exchange Group slid 7% to 8,338p on Thursday — their steepest one-day drop in months — after Rothschild & Co Redburn cut the stock from buy to neutral and slashed its price target from £120 to £104. The catalyst: a blunt warning that artificial intelligence is coming for the heart of LSEG's business model.
• Redburn Says Nearly a Third of Profits Are at Risk. The broker estimated that approximately 30% of LSEG's EBITDA (earnings before interest, taxes, depreciation, and amortisation — a common measure of operating profit) could face downside risk under a realistic base-case scenario.
It described LSEG's economics as "increasingly bar-belled," arguing that real-time data, indices, and post-trade infrastructure remain structurally protected, while terminals and non-real-time data are "more exposed to interface disruption and data commoditisation." For shareholders, this means LSEG may be valued as one company but increasingly behaves like two — one defensible, one under siege.
• The Vulnerable Piece Is Also the Biggest Piece. Around 61% of LSEG's revenue is tied to data-related units, according to Morningstar analyst Niklas Kammer.
Redburn warned that as clients increasingly access information through AI-enabled tools and APIs, some traditional data aggregation and workflow products could experience pricing and demand pressures over time. The existential question: if AI lets banks and funds assemble cheaper data pipelines themselves, why pay LSEG's premium?
• Strong Q1 Numbers Haven't Silenced the Doubters. LSEG reported 10% revenue growth in Q1 2026 and upgraded full-year guidance, yet the downgrade suggested that recent operational momentum may not be durable enough to justify the stock's premium valuation.
The Data & Analytics segment grew 5.1% organically, with Workflows — the most exposed unit — managing only 2.9%. That deceleration is exactly where Redburn's concerns land hardest.
• Elliott Is Watching, and Patience Has Limits. Activist investor Elliott Management built a stake in February and has been engaging with LSEG to improve performance.
Elliott pushed the company to boost buybacks and close margin gaps with rivals.
The fund said recently there is "still an opportunity for further value-enhancing actions" and wants LSEG to "close the valuation gap to industry peers." A slumping stock price only sharpens that pressure.
The stock now trades well below its 52-week high of 10,990p, leaving management squeezed between an activist demanding returns and an analyst warning the core business may be eroding beneath their feet.