Morgan Stanley gives Nasdaq bullish rating on tailwinds strategy shift/strong>
Liz Kiesche, 11 June 2021
Morgan Stanley analyst Michael Cyprys, favoring U.S. exchange operators that are shifting toward recurring revenue and benefiting from secular tailwinds, initiates coverage of Nasdaq (NDAQ +2.3%) at Overweight, Intercontinental Exchange (ICE +0.5%) and CME Global (CME +0.5%) at Equal-Weight, and Cboe Global (CBOE -0.2%) at Underweight.
Sees upside from NDAQ’s move to catch tailwinds from data and analytics, ESG and anti-financial crime, and index segments.
While CME has a “wide moat” for its transactional revenue, the exchange lacks secular growth drivers and is trading at elevated valuation, Cyprys writes.
ICE’s secular growth outlook looks good, but it’s faced with refinancing cliff and crowded investor positioning, the analyst says.
CBOE may take take longer to realize benefits from its strategic shift and investments are likely to pressure margins near term, he said.
Cyprys’s Overweight rating on Nasdaq leans more optimistic than the Neutral Quant rating and aligns with the average Wall Street rating of Bullish (6 Very Bullish, 3 Bullish, 7 Neutral, 1 Bearish).
