Wolfe Research has upgraded its outlook on select business and information services stocks, citing robust fundamentals and structural growth drivers. In a note published this week, analysts named Relx, Experian, and Ascential as top picks, pointing to their strong recurring revenue streams and exposure to digital analytics and data services.
The recommendation comes as the FTSE 100 hovered around 8,210 points in midday trading on Friday, with the FTSE 250 slightly softer at 20,450. Relx shares rose 1.2 per cent to 3,845p, while Experian added 0.8 per cent to 3,210p. Ascential, a mid-cap focused on events and information, gained 1.5 per cent to 420p.
Analysts at Wolfe noted that business information providers benefit from “sticky” subscription models and high barriers to entry, making them attractive in a period when UK inflation remains above the Bank of England’s 2 per cent target. “These companies offer predictable earnings growth and strong cash generation, which is increasingly valued by investors,” the note said.
The sector has outperformed the broader market year-to-date, with the FTSE 350 Business Services index up 9 per cent compared to the FTSE 100’s 5.5 per cent gain. For UK pension holders, this means exposure to defensive growth stocks that can provide steady returns without the volatility of cyclical sectors like commodities or retail.
However, analysts cautioned that valuations in the subsector are elevated, with Relx trading at around 28 times forward earnings. “While the quality is undeniable, investors should be mindful of entry points,” one market strategist said. The Wolfe note also highlighted potential tailwinds from artificial intelligence adoption, as data analytics firms integrate AI to enhance their product offerings.