Nasdaq, Inc.

NDAQ Details

Nasdaq, Inc. (NASDAQ: NDAQ) is a global technology company that provides capital markets and other industries services. Clients can confidently optimize and execute their business visions because of its broad range of data, analytics, software, and services. It manages, operates, and provides products and services in four business segments: Market Services, Corporate Platforms, Investment Intelligence, and Market Technology.

Latest News:

• Launch of Carbon Removal Indexes: On March 24, 2022, NDAQ announced the launch of new commodity reference price indexes. The indexes will track the price of Puro.earth's Carbon Removal Certificates (CORCs) are the first to track the cost of removing carbon dioxide from the atmosphere. Nasdaq hopes to create the transparency needed to encourage investment and support project financing decisions by providing access to carbon removal reference prices.

FY21 Results:

• Growth in Topline: NDAQ reported a growth of 4.64% YoY in its total revenues to USD 5.89 billion in FY21 (ended December 31, 2021) from USD 5.63 billion in FY20.
• Surge in the Bottomline: The company recorded an increase in net income (attributable to its shareholders) to USD 1.19 billion in FY21 vs. USD 933 million in FY20.
• Progress in ARR: NDAQ reported an annualized recurring revenue of USD 428 million in FY21 compared to USD 283 million in FY20.

Key Risk:

• Dependence on Trading and Clearing Volumes: Because a significant portion of the company's revenues is derived from the volume or value of securities traded and cleared on its markets, a general decline in trading and clearing volumes or values is likely to result in lower revenues. If the company cannot offset declining volumes or values through pricing changes, the company's operating results may suffer.
• Technological Risk: The company, which provides technology to the Unlisted Trading Privileges (UTP) Operating Committee, has taken steps to strengthen the system's resiliency. However, subsequent processor system outages or failures while operating the systems could jeopardise the company's business, reputation, and financial standing.

Outlook:

• FY22 Estimates: NDAQ forecasts FY22 non-GAAP operating expenses to be USD 1,680 – 1,760 million as of January 26, 2022. It also estimates the non-GAAP tax rate in FY22 to be between 24.0 and 26.0%.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

NDAQ's stock price has fallen 15.04% in the past three months and is currently leaning towards the mid-band of its 52-week range of USD 147.01 to USD 214.96. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 217.37.

Considering the correction in the stock price, improved margins, healthy balance sheet, positive outlook, associated risks, and current valuation. We recommend a "Buy" rating on the stock at the closing price of USD 177.54, up 1.29% as of March 28, 2022.

Three-Year Technical Price Chart (March 28, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Disclaimer

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