RELX Plc (REL.L): Addressing FAQs Around Legal; severely adverse scenario now priced in. Buy

Since our initiation, the main pushback to our Buy thesis on RELX has been that we are underestimating AI risks in Legal. While Legal accounts for only 12% of group EBIT, a slowdown in this segment could drive a de-rating of the stock, now at 17x 2027E EPS. To assess these concerns, we conducted a series of expert calls and continue to believe that RELX's legal business has a competitive advantage rooted in its ownership of extensive legal datasets. As a case study, we undertake granular analysis comparing RELX datasets with those being developed by new entrant Legora. Our expert discussions unearthed another competitive advantage: RELX's AI tools are designed to be less token-intensive, meaning that while new entrants will likely need to move to consumption-based pricing, RELX can maintain a subscription model, which we think could drive broader adoption and help sustain c.10% growth in Legal revenues. Our scenario analysis suggests that the market is pricing in a severely adverse sce