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UBS Securities Reiterates NYSE Euronext (NYX) At 'Buy', Lifts PT To $38

 April 03, 2012 07:27 PM
 


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).

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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.

While 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 patient.

NYX closed Tuesday's regular session down 1.53% at $29.62.

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