Thomson Reuters Stock Stages Impressive Recovery After AI Software Selloff
Thomson Reuters Corp. has demonstrated remarkable resilience, adding to its nearly 35 percent rebound from early February lows. The company's shares on the TSX have more than recovered losses sustained during the recent artificial intelligence-related software rout that swept through markets.
Analysts Reaffirm Confidence in Legal Information Giant
TD Cowen analysts, led by Vince Valentini, have reconfirmed Thomson Reuters as a top investment pick, maintaining a price target of $175 in a March 3 research note. This assessment follows a comprehensive survey of 100 U.S.-based law firms evaluating their use of generative AI services.
The stock closed Friday at $151.44, showing significant momentum after being caught in a broader software stock selloff triggered by AI company Anthropic's release of tools that markets feared would erode legal software and publishing businesses.
"We believe the selloff in Thomson Reuters is overdone," stated TD analysts, adding that "TRI displays many attributes to maintain a sustainable moat and strong growth prospects." The research suggests Toronto-based Thomson Reuters stands to benefit more from AI advancements than be harmed by them, with new AI players not disrupting its core legal services.
The 12-month consensus price target among 17 analysts stands at $177.97, according to Bloomberg data, indicating continued optimism about the company's trajectory.
Market Strategist Warns Against Premature Dip Buying
David Rosenberg, president of Rosenberg Research & Associates Inc., cautions investors that now may not be the ideal time to buy market dips despite recent declines. The S&P/TSX composite index dropped two percent this week, while the S&P 500 fell just under one percent.
"As is usually the case in military conflicts, as we saw early on after Russia waged war on Ukraine, it comes down to energy prices in terms of the shock waves to all corners of the financial markets," Rosenberg noted.
The price of West Texas Intermediate crude has surged more than 22 percent since hostilities began in Iran, positioning rising energy costs as the primary market risk. Additional pressure comes from a 50 percent spike in European liquefied natural gas prices after Qatar shuttered its LNG plant, combined with the effective closure of the critical Strait of Hormuz oil transportation corridor.
Rosenberg emphasized that the VIX volatility index needs to rise to 50 to signal true market capitulation, whereas it currently sits around 24. "This typically is the most ideal time to start putting cash to work ... unless this war with Iran is resolved first," he advised.
Major Infrastructure Projects Could Revitalize Canadian Freight Sector
After four years of recession-like conditions marked by sluggish volumes, Canada's freight carriers may finally see relief through 11 major national projects, according to CIBC Capital Markets analysis.
Analysts led by Kevin Chiang project that $84 billion in infrastructure spending over a 10-year period beginning in 2025 could boost freight volumes by 1.8 percent annually. CIBC covers four key Canadian freight companies:
- Canadian National Railway Co.
- Canadian Pacific Kansas City Ltd.
- Mullen Group Ltd.
- TFI International Inc.
Top Picks Positioned for Project Benefits
CIBC identifies Canadian National Railway and Mullen Group as their top selections, citing strategic positioning to capitalize on the infrastructure initiatives. CN operates in multiple project regions including:
- The North Coast transmission line in British Columbia
- The Ksi Lisims LNG project in British Columbia
- Canada Nickel's Crawford Project in Ontario
- Nouveau Monde's Matawinie Mine in Quebec
Mullen Group's strong western Canadian presence positions it to benefit from projects like the Red Chris Mine, LNG Canada phase II, and the McIlvenna Bay Copper Mine across British Columbia and Saskatchewan.
"We would also make the case that these infrastructure projects are not being priced into Canadian freight equities today," the CIBC analysts concluded, suggesting potential undervaluation in the sector.
