ICE Inflates Energy Portfolio - Analyst Blog
July 13 2011 - 8:15AM
Zacks
On Tuesday, IntercontinentalExchange Inc. (ICE)
announced its plan to launch 18 fresh over-the-counter (OTC)
cleared energy products from August 1, 2011. ICE will now be
offering over 530 OTC energy contracts, along with the products
announced yesterday, comprising more than 435 new cleared OTC
contracts since the launch of ICE Clear Europe in November
2008.
Accordingly, the energy contracts include global oil and refined
petroleum products coupled with North American natural gas liquids.
ICE has scheduled to launch cleared OTC energy contracts in order
to support its market holding. The company is aware of changing
market needs, and attempts to evolve through its hedging
strategies, product modification and innovation, in turn supporting
volumes and the top-line growth in the long run.
Last month, ICE initiated the trading of 48 global OTC cleared
energy contracts as well as launched 68 global OTC cleared natural
gas products in May this year. The company even launched 15 global
OTC cleared oil products in April this year, while in February, ICE
had also initiated the trading of 21 new gas oil contracts and
three new contracts in US thermal coal futures through ICE Clear
Europe. Following its formerly announced business plans, ICE
launched an additional 100 OTC products in the past few months,
which is expected to propel growth in the long term.
Given that oil, natural gas and petroleum are significant power
generating media globally, such energy contracts strengthen ICE’s
international product portfolio. Additionally, continued product
innovation and licensing agreements give way to new contracts and
adds significant volume.
The launch of contracts by ICE in the rapidly expanding energy
sphere further boosts the company’s competitive leverage in the
derivatives and OTC areas, where presence of arch rivals
CME Group Inc. (CME) and CBOE Holdings
Inc. (CBOE) provide a challenging operating
environment.
Growth through product novelty and expansion in the global
emerging markets is very crucial for ICE, given the ongoing
regulatory turmoil that sets limit for speculative market
participants and poses risk of unsatisfactory financial yield for
operationally successful credit default swap (CDS) clearing
initiative. Furthermore, the ongoing consolidation activity in the
industry has been exerting adequate competitive pressure on the
companies. Like other market peers, ICE also bears sufficient risk
on this front.
Overall, we believe that based on the current volatile macro
environment, ICE has a strong revenue-generating product portfolio,
high earnings visibility, consistent cash generation, disciplined
investment and limited balance-sheet risk. These factors are
expected to drive strong earnings potential in the long run.
On Tuesday, the shares of ICE closed at $125.32, down 0.2%, on
the New York Stock Exchange.
CBOE HOLDINGS (CBOE): Free Stock Analysis Report
CME GROUP INC (CME): Free Stock Analysis Report
INTERCONTINENTL (ICE): Free Stock Analysis Report
Zacks Investment Research
CME (NASDAQ:CME)
Historical Stock Chart
From Sep 2024 to Oct 2024
CME (NASDAQ:CME)
Historical Stock Chart
From Oct 2023 to Oct 2024