US Legal Information Mkt Deteriorating Faster Than Expected in 2009

BNP Paribas Professional Publishing Research Division has just published a 100 page update (pdf) stating their thoughts on the state of play in the world’s leading professional publishing houses..

We’re unable to publish the entire report for you on the blog so here are the highlights. For those of you who would like to get hold of a copy please contact  Sami Kassib: sami.kassab(at)


Here are the highlights of the report

This report includes primary research work on academic library budgets, exhibition industry trends, cost optimisation as well as feedback from our recent contacts with management at 40 listed and privately-held information companies.

Key takeaways are:

* More selective now on professional information companies

Professional information stocks have outperformed the European media sector by 28% over the last 12 months. We now recommend selective profit taking and see more upside within advertising agencies. We cut our 2010 EPS forecasts for most companies except for Thomson Reuters. We downgrade Pearson to Neutral (new TP 770p) and remove the stock from our Key Buy list. We downgrade Informa to Underperform from Neutral (new TP 260p). We reaffirm our Underperform stance on Reed Elsevier (new TP 480p) and our Neutral rating on Thomson Reuters. We upgrade Wolters Kluwer to Outperform (from Neutral) with a new TP of EUR18.

* Growing pressure on late-cyclical revenue streams

From our survey of academic library materials budgets, we expect declining organic revenues for STM information companies in 2010. We also believe trends in the global exhibitions industry and US legal information market are deteriorating faster than expected in 2009. Reed Elsevier and Informa are the most exposed.

* Higher education and regulatory information are our preferred segments

The trends for US university textbooks remain strong (industry revenue growth in January 2009 exceeded 20% yoy). We believe the tax, accounting and compliance information segments could benefit from increased regulatory activity as a consequence of the economic climate. Wolters Kluwer and Pearson are the best placed in these two segments.

* Cost efficiency benefits likely to accelerate

Offshoring, IT optimisation and consolidation synergies are driving the transformation of the cost base of the professional information industry. We expect cost efficiency benefits to accelerate in 2009 and 2010 and companies to deliver savings above guidance in 2009. Thomson Reuters, Reed Elsevier and Wolters Kluwer offer the greatest potential for efficiencygains to protect operating margins.

We all remember that end of year figures for 2008 were very positive for the publishers .. we have a funny feeling that Q.1 09 won’t look so good in the cold hard light of day. Congratulations are due to Kluwer though. Perceived as the underperformer for most of this decade they appear..according to this report anyway.. to be the  company to watch.