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Nasdaq Inc NDAQ

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

A Decent Third Quarter for Nasdaq as Its Listing and Index Businesses Continue to Perform

Michael Miller Equity Analyst

Analyst Note

| Michael Miller |

Narrow-moat rated Nasdaq reported decent second quarter results with EPS of $1.78, in line with the FactSet consensus of $1.72 per share. Net revenue grew 17% year over year with Nasdaq’s market services and investor intelligence segments being notable sources of strength for the quarter. Nasdaq continues to benefit from elevated levels of trading volume for U.S. options, which while below first-quarter highs, were still well above pre-pandemic levels. While we continue to expect some moderation in trading conditions to occur over time, new discount brokerage services and changes in investor behavior will likely act as a tailwind for Nasdaq’s equity and option exchanges, even as it loses market share to new entrants. As we incorporate these results, we are increasing our fair value estimate for Nasdaq from $134 to $150. Roughly $9 of the increase comes from higher revenue assumptions for Nasdaq’s investor intelligence segment, with its index business being the largest driver of the change. Around $4 of the positive adjustment is from higher expected trading revenue with the remainder of the change coming from earnings since our last update and increased expectations for Nasdaq’s listing revenue.

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Company Profile

Business Description

Founded in 1971, Nasdaq is primarily known for its equity exchange, but in addition to its market-services business (about 35% of sales), the company sells and distributes market data as well as offers Nasdaq-branded indexes to asset managers and investors through its information-services segment (30%). Nasdaq's corporate-services business (20%) offers listing services and related investor relations products to publicly traded companies and through the company's market technology group (15%), Nasdaq facilitates the exchange operations of other exchanges throughout the world and provides financial compliance services.

Contact
151 W. 42nd Street
New York, NY, 10036
T +1 212 401-8700
Sector Financial Services
Industry Financial Data & Stock Exchanges
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 5,764

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