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NYSE EURONEXT is About to Explode!
By Joshua Robbins,
josh@bluecollarinvestment.com
With the recent downgrades of NYSE Euronext, it is no wonder why the stock, has seen so vilotile. But what caught my eye and seemed to escape key analyst was the fact that it third quarter earnings doubled. And it will continue! Just today, Transatlantic stock exchange NYSE Euronext (NYX) reported a surge in transactions over April on Friday. Euronext's cash markets had their busiest April ever with 22.2 million transactions completed, up 33.6 percent from the same month a year earlier.NYSE Group exchanges reported 2.6 billion shares handled per day, up 7.1 percent from the same month last year, while its operations in NYSE-listed securities handled 2.1 billion shares per day, up 13.8 percent from 2006.Derivatives business also increased, with Euronext.liffe trading 64 million futures and options contracts in April, up 7 percent from last year. NYSE Euronext was created from the merger of the operator of the New York Stock Exchange with pan-European bourse operator Euronext.
Yesterday, A lawsuit that challenged the planned regulatory consolidation between the National Association of Securities Dealers and the New York Stock Exchange has been dismissed by a federal court. In the lawsuit, Standard Investment Chartered Inc., a California securities firm, had challenged the arrangement in which the Big Board's regulatory arm and the NASD plan to combine their member-regulation functions into a single self-regulatory organization. But a U.S. judge in Manhattan said in a decision dated Wednesday that Standard Investment had failed to exhaust its administrative remedies and ordered that the case be dismissed.
Finally, on Arpil 26th, the earnings call, Net profit jumped to $67.6 million, or 43 cents a share, from $30.3 million, or 24 cents a share. The results exclude the performance of Euronext, which was integrated into the firm on April 4. Analysts polled by Thomson First Call produced an average estimate of 46 cents a share. Revenue rose 54% to $702 million. The NYSE (NYX) said that in the first quarter the percentage of volume in NYSE-listed stocks matched at the exchange and on its ARCA Exchange fell to 65.9% from 75.3% a year ago. The percentage of volume in Nasdaq-listed stocks matched on the NYSE Arca exchange fell to 18.4% from 18.5% last year. Transaction revenue increased to $262.9 million from $76.2 million. "While bottom line results missed expectations for another quarter at NYSE Group, we believe this isn't all that important to the longer-term picture, in which the merger with Euronext reduces the financial impact of the eroding NYSE legacy trading franchise," Fox-Pitt Kelton analyst Edward Ditmire wrote in an early research report Thursday.
The NYSE paid $11.1 million in merger expenses related to the Euronext deal, but Nelson Chai, NYSE Euronext chief financial officer, said the company is on track to achieve $375 million in savings during the next three years. Fixed expenses fell 14% to $229 million from the fourth quarter and 20% from the same period a year earlier. The NYSE recorded a $12.8 million gain related to post-retirement benefits, but was offset by $15.2 million in charges incurred by the exchange to route customer orders from the NYSE to other market centers between Jan. 2 and March 2.
At least one analyst, Richard Repetto of Sandler O'Neill & Partners, dismissed the NYSE's claim that the gain from post-retirement benefits should be included in operating results - which the NYSE said was 47 cents a share. NYSE executives said that though integration between Euronext and NYSE was paramount, the combined company was not ruling out additional acquisitions. Integration "is our first order of order of business," Chai said. "But as you know, our aspirations on globalization in terms of growing out our product lines is there and you cannot always time the moves...as opportunities come up, we're going to have to be prepared." With all this in play, some key indicators were brought to my attention. First, Bollinger Band is closing, which is going to eliminate a good portion of the current vitality which will create, with the news above, an uncanny upswing- something close to what we just saw with Croc’s and Amazon. More importantly, this stock is trading well below it's 50 EMA, thus, it will rise and go above. Finally, this stock has been way over-sold. Therefore the bears are beginning to lose its grip on the stock and the bulls are beginning to take over. This is why we are upgrading this stock to a HOT BUY! Sources: Reuters
Dow Jones News Wire.