Back to top

Bear of the Day

We are downgrading our recommendation on NYSE Euronext, Inc. (NYX) 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.

Please login to Zacks.com or register to post a comment.