Jefferies Jockeys Estimates for Intercontinental Exchange (ICE)
Jefferies & Co. is out with a research report this morning, where it reiterates its Hold rating on Intercontinental Exchange (NYSE: ICE); it has a $122.00 price target on the stock.
The Jefferies analysts said, “ICE's core futures and options business remains solid. Volumes continue to be robust despite an industry wide slowdown in June. However, we are decreasing our 2Q10 estimate by $0.04 to $1.39 on weakness in the company's CDS business and a modestly lower than anticipated average daily commission (ADC) rate in the OTC energy segment. For the quarter, total CDS related revenue was approx. $43M, 8% below our previously published estimate. Digging deeper, while CDS clearing revenue of $16M was $1M above our estimate, Creditex revenue of approx. $27M was $4.6M below our estimate. With respect to the OTC energy segment, it continues to trend higher albeit at a slightly slower pace. ADC of $1.43M was $0.04M below our estimate, but still represents an increase of 4% q/q and 26% y/y.”
They noted, “Average daily volume (ADV) in June modestly slowed vs May (1.35M vs. 1.44M), as lower volatility resulted in an overall decline in industry volumes. However, the m/m decline is less severe than key competitors. A strong surge in World Sugar volumes (+61%) as well as continued strength in Gas Oil (+7%) offset most of the decline in Brent (-14%), WTI (-20%), and Russell (-5%) futures. For the quarter, total volumes continued their upward trend after a relatively stagnant 2009. ADV this quarter was 1.39M, an all-time record, and represents an increase of 8% q/q and 36% y/y.”
They closed by saying, “Management expects total compensation in the second quarter to be in the range $60-62M, which is consistent with our previously published estimate of $62M. However, management did increase its guidance for non-cash comp for the year to $50-55M, up from $45-49M previously. The increase reflects anticipated performance of 105-110% of beginning of year targets. And finally, management indicated the Climate Exchange acquisition is on target to close in July and that additional details would be provided during the earnings call on August 4th.”
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