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Investment idea - IntercontinentalExchange Group Inc (ICE)

IntercontinentalExchange Group Inc. (ICE)  is a network of regulated exchanges and clearing houses for financial and commodity markets. The strong current driver is the acquisition of NYSE Euronext that is expected to be closed in the coming days. It will diversify the business by adding a substantial interstate complex, additional financial indices and the leading global cash equities, equity options and listing venues. ICE have also presented their positive guidance for 2013 assuming slightly more than 1% increase in expenses (prior guidance – 2-3%) and dividends of $75 mn for the Q4 2013, which is contingent on the closing of the NYSE Euronext acquisition.

The company is considered by analysts as a growth-through-deleveraging investment story and a growth-through-cost-cutting investment story, thereby, potentially more effective than peers. The one who decided to invest in ICE obtains an ability to take advantages from the following trends: the migration to OTC clearing in credit and rate, the electronification of Euro-rates/global-credit/Euro gas/Euro-Carbon trading and global migration to natural gas as a clean/abundant energy source, which should drive greater hedging and trading activity.

Financial result for 3Q 2013. Revenues for the quarter grew by 4.5% y/y to $ 337.9 mn driven by 4% growth in Brent revenue, 16% growth in sugar revenue and 15% growth in CDS revenue. Operating expenses increased by 5.1% y/y to $135.7 mn Net income totaled $145 mn, up 8,2% y/y. Operating margin expanded from 60% in 3Q2012 to 61%.

Consensus target price – $226.53, short-term goal - $221.