Zacks Investment Research downgraded
NYSE Euronext Inc.
) 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
), 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
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
CME Group Inc.
) carry a Zacks #3 Rank (Hold), implying stability in the near
CME GROUP INC (CME): Free Stock Analysis
INTERCONTINENTL (ICE): Free Stock Analysis
NYSE EURONEXT (NYX): Free Stock Analysis
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