We are downgrading our recommendation on
NYSE Euronext, Inc.
) to Underperform based on weak volumes and pricing across trading
venues, which led to a reduced top line and lower operating margin.
Its second quarter earnings beat the Zacks Consensus Estimate by a
penny but faltered year over year.
Meanwhile, the recent termination of the European launch of a new
electronic retail derivatives market, which was slated to launch in
the first quarter of 2013 has also eliminated a long-term revenue
potential. We do not expect any radical growth in the top-line
unless the current market recovery provides resonance to liquidity
and credit quality.
Our six-month target price of $22.00 equates to about 11.3x our
earnings estimate for 2012. With an annual dividend of $1.20, this
price target implies a negative total return of 8.3% over that
period. This is consistent with our long-term Underperform
recommendation on the shares.
NYSE EURONEXT (NYX): Free Stock Analysis Report
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