FBR Capital Markets Friday decreased its price target on Nasdaq OMX Group, Inc. (NDAQ), citing reservations about the impact of recent pricing adjustments on the company's market share. The price target was decreased to $23 from $24 and the 2010 EPS estimate was reduced to $2.00 from $2.05. The brokerage, however, reiterated its "Outperform" rating on the stock.
FBR said it had believed that reducing expense and strategic initiatives should support Nasdaq's earnings in spite of market share losses as equity transaction revenues are declining. However, the brokerage said it chooses to be conservative in its estimates ahead of the pricing adjustment that went into effect early this month.
While believing that pricing is going in the right direction, analyst Steve Stelmach said the pricing initiatives could lead to more market share losses, and is concerned about the lack of significant gains in market share from the pricing cuts in July.
FBR said it still believes that the valuation is compelling. It said the new price target of $23 represents 11.5 times its 2010 operating EPS estimate.
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