) plans to announce its Q2 earnings on Wednesday next week (July
27). Last quarter, the company reported record earnings per share
of $0.59 driven by a solid increase in revenues, improvement in
operating margins and growth in profits. Over the last few
quarters, we have observed healthy growth in Nasdaq's market share
of U.S. equity derivatives which we expect to continue in this
quarter. Nasdaq OMX competes with NYSE Euronext (
), BATS Global and Intercontinental Exchange.
We have a price estimate of
$28.80 on Nasdaq's stock
which is about 25% above the current market price.
Growth in U.S. Equity Derivatives
Last quarter, Nasdaq reported 28.7% market share in the U.S.
equity derivatives which translates to an increase of 20% over its
Q1 2010 market share of near 24%. This coupled with over 20%
increase in the size of the U.S. equity derivatives market resulted
in an impressive 45% increase in Nasdaq's US equity derivatives
revenues. Nasdaq is expanding its capabilities to handle
complex orders within the equity option which will help it to
gain market share over its competitors.
Nasdaq acquired FTEN in December last year, which is the largest
processor of real time financial risk management. This free, low
latency product has helped Nasdaq to increase its access services
revenues by 36% in the last quarter. Access services revenues have
shown a consistent growth rate of over 30% during the past 5 years,
and we expect the growth to continue in this quarter too.
See our complete analysis of Nasdaq OMX