NYSE Euronext (NYX) Rises on Barron's Article
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This weekend, a Barron's article entitled "Empty Floor but Full Coffers" highlighted the new changes taking place on the NYSE Euronext's (NYSE: NYX) trading floor. During last month, as electronic trading volume has surged, several floor specialist firms have left the trading floor due to lower "human-to-human" volume. In the short-term, this may seem like a negative for investors in NYX, however, Barron's focused on reasons why "more elbow room on the floor" could lead to more "room for shares of NYSE Euronext to climb higher."
The article tells readers that while the NYSE's share of volume in its own listings has declined, overall volume has surged, probably due to the recent volatile markets and lower cost of trading by investment services companies. Besides these two factors, the article also pointed out that the NYSE's specialist involvement has fallen to an all-time low of only about 6% of all NYSE trades, while overall volume has increased by 27%, certainly suggesting that electronic trading is increasing volume.
Going on, the article mentions Duncan Niederauer's recent appointment as the NYSE's new CEO, and his plan to adjust rules on the floor so that specialists will continue to have a viable role in trading. According to the article, as the NYSE continues to diversify by reaching out to markets outside the U.S., "its core U.S. man-plus-machine model may be stabilizing."
Getting a little fundamental, the article admits that NYSE Euronext is currently trading at a slight discount to other U.S. exchanges. With a P/E of about 30x forward EPS, compared to peer P/E ratios of about 50x, the Barron's article says that if it meets its expected 2008 EPS growth of about 30%, NYX could easily be trading in the high 90's.
Shares of NYSE Euronext are up almost 3% today, about $2 higher than its closing price on Friday. As the other exchanges (NDAQ, ICE, NMX, CME) are not doing quite as well as NYX today, shares are likely seeing upside as a result of the Barron's article.
The article tells readers that while the NYSE's share of volume in its own listings has declined, overall volume has surged, probably due to the recent volatile markets and lower cost of trading by investment services companies. Besides these two factors, the article also pointed out that the NYSE's specialist involvement has fallen to an all-time low of only about 6% of all NYSE trades, while overall volume has increased by 27%, certainly suggesting that electronic trading is increasing volume.
Going on, the article mentions Duncan Niederauer's recent appointment as the NYSE's new CEO, and his plan to adjust rules on the floor so that specialists will continue to have a viable role in trading. According to the article, as the NYSE continues to diversify by reaching out to markets outside the U.S., "its core U.S. man-plus-machine model may be stabilizing."
Getting a little fundamental, the article admits that NYSE Euronext is currently trading at a slight discount to other U.S. exchanges. With a P/E of about 30x forward EPS, compared to peer P/E ratios of about 50x, the Barron's article says that if it meets its expected 2008 EPS growth of about 30%, NYX could easily be trading in the high 90's.
Shares of NYSE Euronext are up almost 3% today, about $2 higher than its closing price on Friday. As the other exchanges (NDAQ, ICE, NMX, CME) are not doing quite as well as NYX today, shares are likely seeing upside as a result of the Barron's article.
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