BofA upgrades Baltic Classifieds, backs Scout24 for steady growth

BofA Securities has updated its coverage on several European information services and classifieds companies, highlighting selective investment opportunities. The firm upgraded Baltic Classifieds Group to "buy" citing its attractive valuation post-sell-off and strong fundamentals, while reiterating "buy" on Scout24 as a preferred name with consistent growth. RELX remains a top pick, forecast for 8% H1 Legal revenue growth driven by AI solutions and trading at a discount to peers. BofA also maintains "buy" on Wolters Kluwer despite a recent de-rating and sees potential for an upsized buyback at Informa, but remains "neutral" on Pearson due to lingering growth concerns.

Analysis

A BofA Securities research update provides a selective, fundamentals-driven outlook on European classifieds and information services stocks, highlighting specific opportunities over broad sector exposure. Baltic Classifieds Group (BCG) was upgraded to “buy” following a recent sell-off, with BofA citing an attractive entry point at 32x CY25E P/FCF and a robust 17% five-year EPS CAGR forecast despite transitory headwinds. Scout24 remains the preferred name in classifieds, with its “buy” rating supported by consistent growth and a valuation of 33x CY25E P/FCF, which is deemed justified by its superior growth profile. Within the broader sector, RELX is a top pick, trading at a notable discount to peers (21x CY25E EV/EBITDA vs >25x average) while expecting 8% H1 revenue growth in its Legal division, propelled by its Lexis+ AI product. Informa is noted for its potential for an upsized buyback and its deeply discounted valuation, reflected in an 8% CY25E free cash flow yield. Conversely, while Wolters Kluwer retains a “buy” rating and trades at a discount (18x EV/EBITDA), BofA acknowledges investor concerns over growth sustainability. Pearson receives a cautious “neutral” rating, as it is expected to lag until more concrete signs of a second-half acceleration emerge.

Key Decisions for Investors

• Investors should consider a selective approach, prioritizing companies with clear growth catalysts and favorable valuations like RELX and Scout24 over names with uncertain near-term outlooks such as Pearson.
• The valuation discount in specific names presents a key opportunity; RELX's 21x EV/EBITDA multiple and Wolters Kluwer's 18x multiple are significantly below peer averages and could offer upside if growth materializes as forecast.
• Baltic Classifieds Group may represent an attractive value play for investors with a longer-term horizon, given its recent sell-off, strong fundamental outlook, and a new 'buy' rating from BofA.
• For those invested in Informa, the potential for an upsized share buyback beyond the £200m minimum is a key catalyst to monitor, which could unlock value from its discounted 8% free cash flow yield.
• The successful deployment of AI, as seen in RELX's Legal division, is a critical performance differentiator and should be monitored as a key long-term value driver across the information services sector.