Despite the economic uncertainty still looming over the global markets, LRM’s revenues are showing a strong growth momentum driven by new deal flow in the midst of an active regulatory environment. Notably, several
important regulations are expected to become effective by the beginning of or during 2013, providing a positive outlook for LRM. The company is seizing the opportunities in the growing regulatory compliance and risk management markets by boosting its research and development activities and extending its position in the North American market through acquisitions. We expect LRM to continue benefitting from growing regulation- driven demand, international expansion and innovation although increasing competition and an uncertain macroeconomic environment mean that the path to success may not be smooth.
Our valuation, based on a combination of intrinsic DCF-based methods and relative valuation techniques, suggests that LRM’s share should be valued at £0.19. We therefore rate the company a Buy.