Nasdaq, Inc.

NDAQ Details

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

Latest News:

• Free Availability of Data: On February 16, 2022, Nasdaq's eVestment platform, a provider of institutional investment data and analytics to asset owners and asset managers, announced that qualifying investors could get free access to private fund managers diversity, equity, and inclusion (DEI) data.

FY21 Results:

• Decent topline performance: NDAQ reported a growth of 4.64% YoY in its total revenues to USD 5.89 billion in FY21 (ended December 31, 2021) compared to USD 5.63 billion in FY20.
• Boost in the bottom line: 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 Risks:

• Reliance on trading and clearing Volumes: Because a significant portion of the company's revenues are linked to 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 lower revenues. It may harm the company's operating results if it cannot offset falling volumes or values through pricing changes.
• Technological Risk: The company, which serves as a technology provider to the Unlisted Trading Privileges (UTP) Operating Committee, has taken steps to improve the system's resiliency. However, subsequent outages or failures of the processor systems while operating the systems could harm the company's business, reputation, and financial status.

Outlook:

• FY22 Estimates: NDAQ forecasts FY22 non-GAAP operating expenses to be in the range of 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 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 17.09% in the past three months and is currently leaning towards the mid-band of its 52-week range of USD 135.57 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 212.97.

Considering the correction in the stock price in the past three months, improved margins, high reinvestment moat, healthy balance sheet, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the current price of USD 174.07, down 0.55% as of February 16, 2022, at 12:46 PM ET.

Three-Year Technical Price Chart (as of February 16, 2022, at 12:46 PM ET). Analysis by Kalkine Group

 Technical Summary Analysis

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.