Thomson Reuters (TSX:TRI) Rolls Out CoCounsel Legal AI, Is The Stock Still Undervalued?
Thomson Reuters (TSX:TRI) is in focus after the company rolled out the next generation of its CoCounsel Legal AI platform, pairing new agentic capabilities with integrations across iManage, AWS and other legal technology partners.
See our latest analysis for Thomson Reuters.
The CoCounsel Legal rollout and new partnerships appear to have coincided with stronger momentum in Thomson Reuters’ share price, with a 30 day share price return of 18.24% and a 90 day share price return of 29.95%. However, the year to date share price return is down 14.84% and the 1 year total shareholder return is down 37.08%, suggesting longer term holders have had a different experience.
If Thomson Reuters’ AI push has you thinking about where else legal and enterprise AI could shape returns, this is a good moment to scan 76 profitable AI stocks that aren't just burning cash
The recent AI driven jump in Thomson Reuters shares is clear. The next question is whether that move already reflects the value of CoCounsel Legal and its partnerships, or if current pricing still leaves meaningful upside on the table.
Most Popular Narrative: 16.3% Undervalued
Based on the most followed valuation narrative, Thomson Reuters’ fair value of CA$179.36 sits above the last close of CA$150.21. This frames the recent AI driven share price move in a different light.
The analysts have a consensus price target of CA$179.36 for Thomson Reuters based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$200.18, and the most bearish reporting a price target of just CA$154.14.
Want to see what is driving that gap between price and fair value? The narrative focuses on sustained revenue gains, thicker margins and a future earnings multiple that is usually reserved for faster growing sectors.
Result: Fair Value of CA$179.36 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this Thomson Reuters narrative can break if AI adoption stays slow or if rivals and in house tools erode pricing power and long term subscription growth.
Find out about the key risks to this Thomson Reuters narrative.
Another View On Thomson Reuters Valuation
The SWS DCF model currently values Thomson Reuters at CA$284.14 per share, compared with the CA$150.21 market price and the CA$179.36 analyst fair value. That is a much larger gap than the analyst target suggests. Which set of assumptions do you trust more?
Look into how the SWS DCF model arrives at its fair value.
Next Steps
Given the mix of optimism and concern around Thomson Reuters, this is a good time to move fast, review the full picture, and weigh the 2 key rewards and 1 important warning sign
Looking for more investment ideas beyond Thomson Reuters?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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