Academic Publishing Survey of funders supports the benign Open Access outcome priced into shares

Proprietary survey: Open Access is moving from proposal to practice. OA has been mandated in the UK and will take effect from April 2013. The European Commission has also encouraged other EU members to introduce OA. In order to understand how the implementation will affect the publishers, we have surveyed some of the largest research funders in Europe. On the key issues of Article Processing Charges (under Gold OA) and embargoes (under Green OA), the feedback was reassuring and reinforces our earlier conclusion that journal profitability under OA should not be materially different to existing profitability, with a negligible probable impact on estimates. 

Valuation anomaly has largely corrected: Although we continue to gain evidence that supports our view of a benign transition to Open Access, we note that the market’s concerns have also receded. From a short-term peak of risk aversion in January 2012 when researchers were petitioning to boycott publishers, the publishers’ shares have re-rated significantly. We find that valuations no longer reflect an 'open access discount'. Lowering ratings: We leave our forecasts unchanged and roll forward our valuation basis to 2013. We raise our DCFbased target price for Reed Elsevier plc to 720p from 675p and for the NV to EUR13.30 from EUR12.40. Due to the 

limited upside we cut our rating on the Plc, for the first time since initiating coverage in May 2010, to Neutral from Overweight. Reed Elsevier NV continues to trade at an above-average discount to the Plc and the 15% potential return supports our Overweight. Our latest survey delivers incrementally negative feedback regarding the challenges facing Informa’s academic franchise. We downgrade our rating on Informa to Underweight from Neutral ..."