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NDAQ Hits 52-Week High, Trades at a Discount: How to Play the Stock

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Key Takeaways

  • Nasdaq shares have gained 44.3% in the past year compared with the industry's growth of 86.8%.
  • For 2025, NDAQ expects Capital Access Platforms revenue growth in the range of 5% to 8% over the medium term.
  • Nasdaq aims to reach 40-50% SaaS revenues as a percentage of total revenues by 2025.

Nasdaq, Inc. (NDAQ - Free Report) hit a 52-week high of $85.72 on June 6. Shares closed at $85.61 after gaining 44.3% in the past year, outperforming the Finance sector and the Zacks S&P 500 composite’s growth of 20.8% and 11.9%, respectively. It, however, underperformed its industry’s return of 86.8%. 

NDAQ has outperformed its peers, including Cboe Global Markets, Inc. (CBOE - Free Report) , Intercontinental Exchange Inc. (ICE - Free Report) and CME Group Inc. (CME - Free Report) , Which have gained 29.7%, 33.4% and 38.1%, respectively, in the past year.

With a capitalization of $49.15 billion, the average number of shares traded in the last three months was 3.6 million.

NDAQ vs Industry, Sector & S&P 500 in 1 Year

Zacks Investment Research
Image Source: Zacks Investment Research

NDAQ Trading Above 50-Day and 200-Day Moving Averages

Shares of Nasdaq are trading above the 50-day and 200-day simple moving averages (SMA) of $77.41 and $77.04, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

NDAQ Price Movement vs. 50-Day, 200-Day Moving Average

Zacks Investment Research
Image Source: Zacks Investment Research

NDAQ Shares are Affordable

Nasdaq shares are trading at a discount compared to the industry. Its forward price-to-book value of 25.52X is lower than the industry average of 26.18X.

Zacks Investment Research
Image Source: Zacks Investment Research

NDAQ’s Growth Projection Encourages

The Zacks Consensus Estimate for Nasdaq’s 2025 earnings per share indicates a year-over-year increase of 13.1%. The consensus estimate for revenues is pegged at $5.05 billion, implying a year-over-year improvement of 8.5%. 

The consensus estimate for 2026 earnings per share and revenues indicates an increase of 11.7% and 6.7%, respectively, from the corresponding 2025 estimates. 

The long-term earnings growth is expected to be 12.1%, better than the industry average of 10.1%. NDAQ has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.

Earnings Surprise History

Nasdaq surpassed earnings estimates in each of the last four quarters, the average being 4.75%.

Average Target Price for NDAQ Suggests Upside

Based on short-term price targets offered by 18 analysts, the Zacks average price target is $85.94 per share. The average suggests a potential 2.31% upside from the last closing price.

Zacks Investment Research
Image Source: Zacks Investment Research

Nasdaq’s Favorable Return on Capital

Return on equity in the trailing 12 months was 15.38%, better than the industry average of 13.93%. This highlights the company’s efficiency in utilizing shareholders’ funds. 

Also, the return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting NDAQ’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 6.8%, better than the industry average of 5.2%.

Zacks Investment Research
Image Source: Zacks Investment Research

Key Points to Note for NDAQ

Nasdaq’s growth strategy focuses on generating more revenues from high-growth Market Technology and Investment Intelligence segments, forward R&D spending on higher-growth products, expansion of its Anti-Financial Crime clientele and innovations. 

The company expects strong growth from its index and analytics businesses and moderate growth in its exchange data products across U.S. and Nordic equities. For 2025, Nasdaq continues to expect Capital Access Platforms to deliver revenue growth within its medium-term growth outlook range of 5% to 8% with subdivision revenue growth expected to be consistent with prior comments provided in January and Financial Technology to deliver revenue growth within its medium-term growth outlook range of 10-14% and total Solutions revenue growth of 8% to 11% over the medium term. 

NDAQ has an impressive inorganic story, providing it with direct access to the Canadian equities market, expanding its technology offerings, and enhancing its market surveillance techniques. 

Nasdaq noted that the anti-fin crime space has a total addressable market of $12.5 billion. With Verafin under its portfolio, NDAQ established itself as a reg tech leadership to create a global SaaS leader. Nasdaq aims to achieve 40-50% SaaS revenues as a percentage of total revenues this year.

Nasdaq has been incurring higher expenses that weigh on its net margin. For 2025, NDAQ narrowed the non-GAAP expense guidance to a range of $2.265 billion to $2.325 billion from $2.245 billion to $2.325 billion. In the second quarter, Nasdaq expects slightly higher expense growth than in the first quarter due to the timing of the annual compensation cycle.

Final Take on NDAQ Stock

Nasdaq is set to grow on impressive organic growth, an increasing on-trading revenue base and strategic buyouts to capitalize on market opportunities. Nasdaq is investing in proprietary data, migrating markets and SaaS solutions to capitalize on the growth opportunities in the cryptocurrency markets.

NDAQ’s dividend story is impressive. It has steadily increased its dividend each year and will continue to do so to achieve a dividend payout ratio of 35-38% by 2027. 

Higher return on capital, favorable growth estimates, as well as attractive valuations, should continue to benefit NDAQ over the long term.
Given the escalating expenses, investors should wait for a better entry point for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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