Nasdaq, Inc.

NDAQ Details

Nasdaq, Inc. (NASDAQ: NDAQ) is a global technology firm that specialises in capital markets and other areas. Clients can confidently optimise and execute their business visions because of its comprehensive spectrum of data, analytics, software, and services. Market Services, Corporate Platforms, Investment Intelligence, and Market Technology are the four business segments it oversees, operates, and delivers products and services.

Latest News:

• Quarterly Dividend: On April 20, 2022, the company declared a quarterly dividend of USD 0.60 per common share (YoY growth of 11%), payable on June 24, 2022, to shareholders of record on June 10, 2022.

Q1FY22 Result Highlights:

• Growth in Topline: NDAQ reported a growth of 4.82% YoY in its total revenues to USD 892 million in Q1FY22 (ended March 31, 2022) from USD 851 million in FY21, driven by 15% growth in Solutions Segment revenues partially offset by 6% decline in Market Services revenues.
• Decline in the Bottomline: The company recorded a decrease in net income (attributable to its shareholders) to USD 284 million in Q1FY22 vs. USD 298 million in Q1FY21.
• Progress in ARR: NDAQ reported an annualized recurring revenue of USD 1.91 billion in Q1FY22 compared to USD 1.76 billion in Q1FY21.

Key Risk:

• Dependence on Trading and Clearing Volumes: Because the volume or value of securities traded and cleared on the company's markets accounts for a significant portion of its revenues, a general fall in trading and clearing volumes or values is likely to lower revenues. The company's operating results may suffer if it cannot counteract declining volumes or values through pricing changes.
• 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 1,700 – 1,760 million as of April 20, 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 19.76% in the past six months and is currently leaning towards the lower-band of its 52-week range of USD 156.72 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 201.15.

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 161.67, down 2.98% as of April 26, 2022.

Three-Year Technical Price Chart (April 26, 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. 

Note 3: The report publishing date is as per the Pacific Time Zone.