Reed Elsevier share price: Company reaffirms outlook for full year

In all candour, we can’t say the 1Q is a game-changing set of results – literally nothing has changed since the FY results at the end of Feb. But then again, this is part of the attraction of Reed Elsevier: small growth in revenues across the group’s divisions should be amplified by small but incremental margin gains which in turn should be amplified by accretive cash usage (part deals, part buy backs). The net result of this is steady, predictable growth. Valuation may be more stretched than a few months ago (15.7x 2014E P/E & 3.2% yield for PLC; 14.2x and 3.5% for NV), but still compares favourably with peers both within media and in other relevant sectors (business services/consumer staples). We rate REL/ELSN as Buy.

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