RBC Analyst Downgrades Thomson Reuters

Thomson Reuters Corp. (TRI) has been downgraded and its price target cut as a result of the negative implications last week’s events have on the financial sector and the broader economy.

In a research note, RBC Capital Markets analyst Drew McReynolds said:

The possibility of further financial services consolidation combined with increased discipline and restraint as the global financial system recapitalizes are likely to reduce the size and near-term growth outlook for many of Thomson Reuters’ end-markets.

He also noted that volatility in emerging markets suggests a slower pace for the company’s geographic expansion efforts.

Mr. McReynolds cut his price target from $39 per share to $37 and moved his rating to “sector perform” given Thomson Reuters’ 18% two-day run-up.

He does not expect a major catalyst for the stock – more clarity on the pending downturn in its markets division – until the first half of 2009. Nonetheless, the analyst is bullish in the long-term as a result of Thomson Reuters’ diversified and high-growth asset mix, a forecasted lift in net asset value for 2011 and 2012, and its few secular challenges relative to others in the media space.