Thomson Reuters Will Be Affected by Wall Street Layoffs

Thomson Reuters Corp. reports third-quarter earnings on Wednesday, and most eyes will be on revenue momentum in the company’s markets division, which accounts for about half of total revenues.

UBS analyst Jeffrey Fan, who rates the stock a ‘sell,’ is calling for about 4% organic growth, in line with most estimates. He reiterates his view, however, that the division could see revenue declines of about 5% for next year, given the time lag between layoffs at investment banks and the impact on the company’s bottom line.

Thomson Reuters markets business is susceptible to downturns in the financial services sector because the company depends on banks and insurance firms to buy its data and computer terminals.

“Until investors are comfortable that market revenues have reached a trough, we believe [Thomson Reuters] is likely to underperform,” writes Mr. Fan in a note to clients this morning.

Mr. Fan has previously written that he does not expect a share price recovery for Thomson Reuters until at least the middle of next year.

The company’s stock is down about 30% year to date.