<font><font face="trebuchet ms,sans-serif">[Forwarding from Sami Kassab, via LibLicense. --Peter Suber.]<br></font></font><br><div class="gmail_quote"><br>Forwarded with permission<br>
To: <<a href="mailto:liblicense-l@listserv.crl.edu">liblicense-l@listserv.crl.edu</a>>:<br>
Date: Mon, 6 Feb 2012 19:47:24 -0500<br>
<br>
Sami Kassab <a href="mailto:sami.kassab@exane.com">sami.kassab@exane.com</a><br>
<br>
Bonjour, Please find our report on Reed Elsevier released this<br>
morning. We argue that:<br>
<br>
* Noise around boycott against Elsevier offers short term trading opportunity<br>
<br>
Reed Elsevier was the worst performing media stock last week. We<br>
believe this is due to investor concerns on the back of T. Gowers'<br>
petition to boycott publishing and refereeing in Elsevier's journals.<br>
We believe the share price reaction was overdone and recommend buying<br>
the shares.<br>
<br>
* Scientists are boycotting the boycott<br>
<br>
Similar petitions in favour of Open Access were organised in 2000 and<br>
2007, with no impact on Elsevier's fundamentals. Our tracking not only<br>
shows that this latest petition lags behind the two preceding ones but<br>
also suggests that its momentum is slowing. Fewer than 5,000<br>
scientists have signed up, whereas Elsevier works with more than 6m<br>
scientists worldwide. The low take-up of this petition is a sign of<br>
the scientific community's improving perception of Elsevier.<br>
<br>
* Open Access unlikely to hurt financials in the medium term and is priced in<br>
<br>
The proportion of Open Access is growing at less than 1% pa.<br>
Elsevier's contract lengths are getting longer and the company's<br>
growth efforts are focused on new products rather than pricing. Open<br>
Access is unlikely to hurt Elsevier in the next five years and the<br>
longer term risk is more than priced in, in our view<br>
<br>
* Results are due on 16 February<br>
<br>
We expect EPS11e of 47p, slightly ahead of the consensus 46p, and an<br>
outlook supportive of the group's defensive growth profile and<br>
improved fundamentals. The announcement of a new CFO and a possible<br>
share buyback could be two additional positives. Reed Elsevier PLC<br>
trades on EV/EBIT12e of 8.8x. It offers defensive growth at a<br>
reasonable price. We remain buyers of the stock on the current share<br>
price weakness.<br>
<br>
Many thanks for your interest in our research!<br>
<br>
Regards,<br>
Sami Kassab/Exane Paribus<br>
</div><br>