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On Tuesday, Citi analysts, led by Chris Allen, adjusted the price target for Nasdaq OMX Group Inc. (NASDAQ:NDAQ) downward to $75 from the previous target of $84, while maintaining a Neutral rating on the stock. The stock, currently trading at $67.74, has declined 12.09% year-to-date, though InvestingPro data shows five analysts have recently revised their earnings estimates upward for the upcoming period. The revision comes amidst a mix of robust recent trading and index volumes, which are expected to contribute positively to Nasdaq's first-quarter performance. These volumes have been bolstered by the current levels of market volatility, which may continue to drive healthy activity in the near term.
Despite the positive activity, the analysts foresee potential challenges ahead for Nasdaq. The recent market pullback is anticipated to lower the asset under management (AUM) levels for indexes. Trading at a P/E ratio of 34.8x and showing robust revenue growth of 22% over the last twelve months, Nasdaq presents a mixed picture for investors. Additionally, Nasdaq has indicated that it is experiencing longer sales cycles within its Calypso business for the first quarter. The analysts predict that the volatility observed in recent times could prolong these headwinds into the second quarter. For deeper insights into Nasdaq's valuation and growth metrics, InvestingPro subscribers have access to over 30 additional financial metrics and exclusive analysis.
The Citi team also expressed concerns about potential pressures in other segments of Nasdaq's operations, including data and listings, workflow and insights, and market technology, due to the current market and economic uncertainty. Another factor that could influence Nasdaq's stock is the expiration of the lockup period for 43 million shares held by Thoma Bravo, set to expire on May 1, which could lead to increased selling pressure on the stock.
In conclusion, while recent trading activity has been strong, Citi analysts are cautious about the future, citing various business areas that could face headwinds and the upcoming expiration of a significant share lockup period as reasons for their tempered outlook on Nasdaq OMX Group Inc. According to InvestingPro analysis, the stock's RSI indicates oversold territory, and investors should note the upcoming earnings report scheduled for April 24, 2025.
In other recent news, Nasdaq Inc. is preparing to release its first-quarter earnings report for 2025, with Raymond (NSE:RYMD) James maintaining an Outperform rating on the company. The financial firm continues to hold a positive outlook, emphasizing Nasdaq's growth potential and diversified business model. In a significant development, Moody's Ratings has upgraded Nasdaq's long-term issuer and senior unsecured debt ratings to Baa1, citing improved debt leverage and a strong market position. This upgrade follows Nasdaq's acquisition of Adenza, which contributed to reducing its debt/EBITDA leverage.
Additionally, Nasdaq has announced plans to open a new regional headquarters in Dallas, Texas, highlighting its commitment to the region where it generates substantial revenue. The move aligns with Nasdaq's strategy to support the local financial ecosystem and foster innovation. Furthermore, Nasdaq has secured its leadership team by finalizing new contracts with key executives, including CEO Adena Friedman, ensuring continuity in its management structure.
In a forward-looking initiative, Nasdaq plans to introduce 24-hour trading by the second half of 2026, pending regulatory approval. This initiative is part of a broader industry trend to meet the growing global demand for U.S. stocks. These recent developments reflect Nasdaq's strategic efforts to enhance its market position and adapt to evolving industry dynamics.
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