NYSE Euronext Downgraded to Strong Sell - Analyst Blog
08 Gennaio 2013 - 3:30PM
Zacks
Zacks Investment Research downgraded NYSE Euronext
Inc. (NYX) to a Zacks #5 Rank (Strong Sell) on January
5.
Why the downgrade?
Posting disappointing results consecutively for the first three
quarters of 2012, NYSE has witnessed sharp declines in its estimate
revisions. Shares of this 220-year old stock exchange have been
witnessing a downward trend since May 2011. Although it showed some
improvement from the historical lows, it is yet to return to its
record highs.
Moreover, the proposed merger with
IntercontinentalExchange Inc. (ICE), announced
last month, has made ratings agencies concerned about the huge
combined debt of the merged entity amid low working capital.
Although the business profile of the merger appears strong and is
expected to generate strong cost synergies and competitive
leverage, it also raises questions over the future of NYSE
On November 6, NYSE reported third-quarter 2012 operating
earnings per share of 44 cents, up 3 cents from the Zacks Consensus
Estimate. However, results plunged 38% from 71 cents recorded in
the year-ago quarter.
Results primarily witnessed deterioration as the top line slid
20.6% year over year, driven by poor transaction and clearing fees
and market data revenue that constitute about 73% of the gross
revenue. A drastic decline in volumes across all global derivatives
and cash trading venues along with unfavorable currency
fluctuations and lower average revenue per contract also restricted
growth.
Consequently, the Zacks Consensus Estimate for 2012 decreased
5.0% to $1.80 per share over the last 60 days as 13 out of the 14
estimates were revised downward. For 2013, 12 of 14 estimates were
revised downward over the last 60 days, dipping the Zacks Consensus
Estimate by 5.2% to $2.30 per share.
Other Stocks to Consider
However, not all players in the stock exchange industry are
underperforming like NYSE. Its close competitors
IntercontinentalExchange and CME Group Inc. (CME)
carry a Zacks #3 Rank (Hold), implying stability in the near
future.
CME GROUP INC (CME): Free Stock Analysis Report
INTERCONTINENTL (ICE): Free Stock Analysis Report
NYSE EURONEXT (NYX): Free Stock Analysis Report
To read this article on Zacks.com click here.
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