Thomson Reuters’ Anthropic related pullback improves risk reward balance

Investing.com -- RBC upgraded Thomson Reuters to outperform, saying a recent pullback has improved the stock’s risk-reward balance even as artificial intelligence reshapes the company’s markets.

Anthropic, maker of the Claude chatbot, launched a legal plug-in for its Claude Cowork coding tool on January 30 that helps carry out tasks including reviewing legal documents and generating briefings.

Thomson Reuters tumbled nearly more than 20 % last week amid a broad software, data and professional services sector selloff.

The brokerage said its scenario analysis points to a wider range of outcomes as agentic AI changes how legal and tax services are delivered, but sees a higher potential growth ceiling over the next several years.

It added that the evolution of the total addressable market will be the most important factor in determining the company’s growth path and risk profile.

RBC said the current valuation, at about 12.5 times forward EV/EBITDA, better reflects both the opportunities and risks tied to AI.

The firm expects Thomson Reuters to maintain or strengthen its position in its core legal and tax businesses over the next three to five years as it rolls out AI tools. It forecasts mid-teens net asset value growth from 2025 to 2029, supported by about 100 basis points of annual margin expansion.

The brokerage also pointed to roughly $11 billion in excess balance sheet capacity through 2028, which it said could support share buybacks and provide a floor for the stock.

RBC said a key catalyst will be the company separating itself from the broader AI disruption narrative. It expects a gradual pickup in organic revenue growth through 2026 and into 2027, early monetization of AI products, additional metrics showing competitive strength, and possible partnerships or acquisitions to reinforce its position.

The firm said continued expansion of the market for legal and tax services, driven by AI, could also help close the gap between the stock’s public valuation and its intrinsic value over time.

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