Bernstein ups this information services firm to Buy on attractive upside potential

Investing.com -- Bernstein has upgraded Wolters Kluwer to Outperform, arguing that recent share weakness has created an attractive entry point despite ongoing concerns about artificial intelligence disruption.

The bank set a new price target of €140, down from €160, but emphasized that the “risk/reward trade-off has shifted to attractive upside”.

The sharp drop in Wolters Kluwer shares recently was linked to investor worries over two main issues: the potential impact of artificial intelligence on its Clinical Solutions franchise, and uncertainty tied to an upcoming leadership transition.

Current CEO Nancy McKinstry, who has led the company for more than two decades, will step down in early 2026. She will be succeeded by Stacey Caywood, a long-time Wolters Kluwer executive.

Bernstein analysts led by Christophe Cherblanc argue that “none of this applies to WKL in our view, and incoming CEO S. Caywood has strong credentials,” adding that concerns should ease as the transition nears.

Analysts also questioned the scale of the valuation reset tied to Clinical Solutions, where Wolters Kluwer’s UpToDate product competes with newcomers like OpenEvidence.

The analysts said the extra three turns of price-to-earnings (P/E) multiple contraction “meant a -€3.5bn value hit, vs OpenEvidence mid-July $3.5bn valuation, or a ‘pre-concerns’ Clinical Solutions Bern €6bn value.” In their view, investor fears were overdone.

Bernstein adjusted its free cash flow yield (FCFY) target range higher by 50 basis points to 3.5–4.5%, reflecting both the reassessment of Clinical Solutions and the leadership transition. On this basis, the analysts believe the risk/reward profile now justifies an Outperform rating.

They forecast a 5.5% trend revenue growth rate at the midpoint and a 10.2% EPS growth CAGR, compared with consensus estimates of 5.2% and 9.3%.

At the same time, Bernstein reiterated an Outperform rating on Relx (LON:REL) and raised its price target slightly to 4,345p from 4,290p, a move reflecting time value rather than any change in assumptions.

The analysts described RELX’s Risk and Legal divisions as “gardens walled by domain expertise” and noted that its Scientific, Technical and Medical arm continues to gain share in Open Access publishing thanks to generative AI.

On valuation, analysts said Relx shares “are currently trading at the bottom end of our 2025-26 target range.”

Despite renewed fears about AI disruption, Bernstein said the overall risk for the two companies is “manageable to negligible/slightly positive across various segments,” pointing to incumbents’ strong domain expertise, integrated tools, and early AI investments.