UPDATE: Canaccord Genuity Initiates Coverage on Thomson Reuters Corporation with Buy Rating, $36 PT on Substantial Margin Expansion Potential

In a report published Monday, Canaccord Genuity analyst Aravinda Galappatthige initiated coverage on Thomson Reuters Corporation

with a Buy rating and $36.00 price target. In the report, Galappatthige noted, “We are initiating coverage on Thomson Reuters Corp. (TRI) with a BUY recommendation and a 12-month target price of US$36.00 per share. We believe TRI has substantial margin expansion potential post 2013, as its single platform strategy in the Financial & Risk (F&R) segment (half of corporate EBITDA) plays out. We believe a 500 bp expansion (translates to over $340M in EBITDA) is achievable in F&R over a three-year period post 2013. This together with a recovery in organic revenue growth in F&R driven by the proliferation of its new desktop product Eikon, we expect, would lead to a phase of higher EBITDA and FCF growth post 2013. Consequently, we believe that TRI's EBITDA growth outlook is transitioning from flat or low single digits to a mid-single digit (we believe 6% post 2013) growth scenario. Our projections do not factor in a change in growth profile in Legal, the other major division of TRI.” Thomson Reuters Corporation closed on Friday at $32.61.