Barclays Underwhelmed By Thomson Reuters' $1 Billion Share Buybacks


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Barclays expressed its disappointment over Thomson Reuters Corp

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(NYSE: TRI)'s $1 billion share buyback announcement that came along with its agreement to sell its intellectual property & science business to private equity funds affiliated with Onex Corporation and Baring Private Equity Asia for $3.55 billion in cash.

"While post-tax proceeds of $3.2–3.4 billion (5–10 percent tax on sales price) is a pleasant surprise, the limited buybacks ($1 billion) will likely leave equity-holders wanting more," analyst Manav Patnaik wrote in a note.

"With interest rates at historic lows (& CP at ~1 percent vs. rest 4–5 percent), we were fully expecting more buybacks," Patnaik continued.

The company plans to use $1 billion of proceeds to repurchase shares, which are part of the previously announced $1.5 billion program. It plans to use the balance proceeds to pay down debt and reinvest in the business.

Meanwhile, the analyst slashed his buyback expectations for FY16–17 to $2.8 billion from $4 billion. Patnaik's FY17 EPS estimate stays flat at $2.34.

"While TRI's adjusted EBITDA margin will shrink ~50bps, strategically the portfolio pruning allows for a sharpened focus on 'the intersection of global commerce & regulation,' as IP&S historically offered limited cross-sell opportunities," Patnaik highlighted.

The analyst has an Equal-Weight rating and $40 price target on the stock, which is currently up 1.69 percent on the day to $42.18.

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27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Posted In: Analyst ColorNewsPrice TargetReiterationBuybacksM&AAnalyst RatingsBarclaysBaring Private Equity AsiaManav PatnaikOnex Corporation