Raymond James Downgrades Nasdaq On Valuation

Raymond James’ Patrick O'Shaughnessy downgraded Nasdaq Inc NDAQ from Strong Buy to Outperform, while raising the price target from $67 to $70, following the company’s share price gains and multiple expansion over the past year.

Outperformance Of Shares

Nasdaq’s shares are currently trading at a modest premium to the market, boosted by improving investor sentiments around the “growth prospects and stability of Nasdaq’s non-transaction revenue sources,” analyst Patrick O'Shaughnessy said. Shares are up 28 percent over the past year, versus a gain of 9 percent for CBOE, a 1 percent increase for ICE, and a 3 percent decline for CME Group.

“We continue to expect growth in non-transaction revenues and disciplined expense management to provide stability and drive long-term EPS improvement,” O'Shaughnessy wrote.

Take On Recent Acquisitions

Since December 2015, Nasdaq has bought 4 companies for a total of $1.5 billion. While terming Nasdaq’s latest acquisitions as “solid strategic moves,” the analyst mentioned that they are unlikely to have a dramatic impact on the company’s earnings profile, although they should drive “some EPS upside.”