UPDATE: Keefe, Bruyette & Woods Upgrades NASDAQ OMX Group to Outperform, Raises PT as Stability Pays Off

In a report published Monday, Keefe, Bruyette & Woods analyst Niamh Alexander upgraded the rating on NASDAQ OMX Group (NASDAQ: NDAQ) from Market Perform to Outperform, and raised the price target from $45.00 to $55.00.In the report, Keefe, Bruyette & Woods noted, “We think it's time to give NDAQ more credit for delivering growing cash earnings since the crisis and the recent rebase of each earnings due to the acquisitions. We are also encouraged that management has made it known that it looked at several deals recently but passed on pricing, preferring share repurchases at this 8% free cash flow yield. When we consider NDAQ relative to other capital markets or processing peer business that have similar cash earnings growth trends and cash distribution, it stacks up well everywhere except in its multiple, where it trades at a significant discount. This is simply a fundamental call to catch up the valuation to the delivery on the earnings potential and eliminate the discount at which the stock currently trades relative to businesses with similar cash generation and distribution records and opportunities. We think having a deeper bench of management and some succession planning is also encouraging, and we suggest some steady dividend growth from here could further boost the stock's multiple over time.”NASDAQ OMX Group closed on Friday at $45.68.