Exchange Stocks Fall As Analysts Fret Volume, Currency Hits
February 02 2009 - 10:13AM
Dow Jones News
Wall Street analysts cut their ratings and estimates for stock
exchange companies Monday, saying they face increasing threats to
their businesses from declining trading volumes and the sinking
value of international currencies.
Shares of NYSE Euronext (NYX) took the hardest hit from the
analyst comments, declining 9.5% to $19.90 in morning trading.
Analysts at Goldman Sachs and Keefe, Bruyette & Woods
downgraded their ratings of NYSE, saying it faces problems beyond
lower volumes due to its heavy exposure to European markets.
Citigroup analyst Donald Fandetti cut earnings estimates for all
the exchange operators Monday. "The slower volumes reflect a world
where hedge funds have deleveraged, Wall Street has consolidated
and risk taking has been dialed back," he said in a research
note.
Goldman Sachs cut its rating on NYSE to sell and cut its price
target to $19 from $33, saying that in addition to the lower
trading volumes hurting exchanges in general, NYSE has the most
direct exposure to the falling value of the euro and the British
pound, as it generates 48% of its revenue from Europe.
Goldman also cut Nasdaq to neutral based on its exposure to
European trading, though the firm said Nasdaq is less exposed than
NYSE, with about 28% of its revenue coming from Europe.
The value of the euro versus the U.S. dollar has fallen 13.5% in
the last year, while the pound has fallen 26%.
Goldman also said NYSE's decision to offer higher fee rates to
specialists to increase its market share will hurt its earnings in
the near-term, by about 15 cents per share in annual earnings.
KBW cut its rating on NYSE to market perform and its price
target to $25 from $38, and also cited the effect of unfavorable
exchange rates as well as more significant pressure on U.S. and
European cash equities and weaker trading volume at the start of
the year than it had expected.
-By Ed Welsch, Dow Jones Newswires; 201-938-5244;
edward.welsch@dowjones.com
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