UBS Securities analyst Alex Kramm increased his price target on
shares of NYSE Euronext (NYSE:NYX) to $38 from $32, while reiterating
his "Buy" rating.
The brokerage lowered its 2012 EPS estimate to $2.47 from $2.65 and
its 2013 estimate to $3.14 from $3.18, while raising its 2014 estimate
to $4.00 from $3.67.
Kramm said incremental information from
investor day included updated cost guidance for 2012 (in line with
expectations after a more detailed review), a 3-year cost cutting
initiative ($250 million over 3 years), and previews of new growth
initiatives (clearing, CFDs, technology).
[Related -Merger Arbitrage Mondays – June 3, 2013]
While the stock only showed a limited reaction Monday, the analyst
believes it is bound to outperform as investors begin to fully
appreciate the earnings power created over the next couple of years.
Kramm is lowering his near-term estimates on current volume trends and a
slightly higher expense base, he is raising 2014 EPS estimate. He is
also raising price target to $38 as 2014 becomes his primary valuation
year. Incremental upside could be driven by a cyclical recovery in
volumes and further buybacks ($0.50-plus).
The biggest risk to the analyst's updated buy thesis is the potential
for NYX to become a multi-year cost cutting story that investors are
not willing to give credit to. In addition, he believes estimates will
remain pressured by a lackluster trading environment. That said, at a 4%
dividend yield he believes investors are well compensated to be
NYX closed Tuesday's regular session down 1.53% at $29.62.