NASDAQ Eyes European Expansion - Analyst Blog

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In an effort to explore the European market, NASDAQ OMX Group Inc. ( NDAQ ) has purchased NOS Clearing ASA, a Norwegian commodities clearing house, Reuters reported earlier this week. The terms of the deal were undisclosed.

The news of this acquisition comes on the heels of NASDAQ's plans to build a new interest rate derivative trading platform - NASDAQ NLX - in London. The trading platform is scheduled to debut by the first quarter of 2013.

NASDAQ is aggressively making efforts to expand its presence in Europe. The company believes that adding another operating arm in this region will help it to move a step closer towards strengthening its international presence in the energy sector.

NASDAQ has been performing quite well over the few weeks which is reflected in its improving share prices. The stock has gained 7% over the last two weeks to close at $ 22.76 on Tuesday, July 3.

The company's improving cash position also supports the acquisitions undertaken by it. Its cash and cash equivalents improved 19.6% year over year to $525 million as of March 31, 2012.

NASDAQ has been facing intense competition with the recent wave of M&A activities in the stock exchange industry. Keeping pace with the company's operations, its closest competitor, NYSE Euronext Inc. ( NYX ), is also expanding its market presence in Europe. It announced the launch of its regulated exchange for international listing, NYSE Euronext London, late last week.

We believe, going ahead, increased competition can severely hamper growth in trading activities and the markets for the company's products, thereby adversely affecting its operating results.

NASDAQ currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We maintain a long-term Underperform rating on the shares of the company.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: NDAQ , NYX

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