Forwarded with permission
To: <[log in to unmask]>:
Date: Mon, 6 Feb 2012 19:47:24 -0500

Sami Kassab [log in to unmask]

Bonjour,  Please find our report on Reed Elsevier released this
morning. We argue that:

* Noise around boycott against Elsevier offers short term trading opportunity

Reed Elsevier was the worst performing media stock last week. We
believe this is due to investor concerns on the back of T. Gowers'
petition to boycott publishing and refereeing in Elsevier's journals.
We believe the share price reaction was overdone and recommend buying
the shares.

* Scientists are boycotting the boycott

Similar petitions in favour of Open Access were organised in 2000 and
2007, with no impact on Elsevier's fundamentals. Our tracking not only
shows that this latest petition lags behind the two preceding ones but
also suggests that its momentum is slowing. Fewer than 5,000
scientists have signed up, whereas Elsevier works with more than 6m
scientists worldwide. The low take-up of this petition is a sign of
the scientific community's improving perception of Elsevier.

* Open Access unlikely to hurt financials in the medium term and is priced in

The proportion of Open Access is growing at less than 1% pa.
Elsevier's contract lengths are getting longer and the company's
growth efforts are focused on new products rather than pricing. Open
Access is unlikely to hurt Elsevier in the next five years and the
longer term risk is more than priced in, in our view

* Results are due on 16 February

We expect EPS11e of 47p, slightly ahead of the consensus 46p, and an
outlook supportive of the group's defensive growth profile and
improved fundamentals. The announcement of a new CFO and a possible
share buyback could be two additional positives. Reed Elsevier PLC
trades on EV/EBIT12e of 8.8x. It offers defensive growth at a
reasonable price. We remain buyers of the stock on the current share
price weakness.

Many thanks for your interest in our research!

Regards,
Sami Kassab/Exane Paribus