Goldman Sachs Upgrades IntercontinentalExchange (ICE) to Conviction Buy
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(Updated - June 23, 2021 5:47 AM EDT)
Goldman Sachs analyst Alexander Blostein upgraded IntercontinentalExchange (NYSE: ICE) from Buy to Conviction Buy with a price target of $141.00.
The analyst comments "We add Buy-rated ICE to Americas Conviction List with a 12-month price target of $141, implying 24% upside from current levels. ICE has been among the biggest laggards in our coverage YTD – essentially flat vs. SPX +12%/XLF +21% – with NTM P/E of 22x at a significant discount to peers across Exchanges and Data Services companies. Based on ICE's business mix, today's valuation is at a record 24% discount to the implied SOTP, which we think (a) overly discounts risks from decline in mortgage refi activity (<10% of LTM revenues), (b) ignores momentum in the rest of ICE – particularly in Energy trading amid structural tailwinds in clean energy markets, and (c) doesn't reflect increasing likelihood of resumptions in share repurchases in the next 2-3 quarters. We see ICE delivering 6% 2022 and 2023 revenue growth (even with headwinds from lower refi). Further, we think ICE's balanced revenue mix is well-positioned to perform under a wide range of both re-flationary and de-flationary conditions, with a long-term revenue growth algorithm of 4%-7%."
Shares of IntercontinentalExchange closed at $114.45 yesterday.
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Related EntitiesGoldman Sachs Conviction Buy List, Goldman Sachs
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