RBC Capital Markets reiterated and Outperform rating on Nasdaq Inc. (NASDAQ:NDAQ), with a price target of $88.00.
The firm's analysis highlighted a year-over-year increase in September's US equity options volumes by 13%, reaching 267 million contracts. This growth contributed to an approximate 8% rise in the average daily volume (ADV) for the third quarter of 2024, totaling 857 million contracts.
Despite the positive trend in US markets, European options and futures contracts experienced a decline, falling by 12% year-over-year to 5.1 million contracts. Consequently, the third-quarter ADV for these European contracts also decreased by 12% compared to the previous year, settling at 14.1 million.
In the Cash Equities sector, the US equity options ADV rose by 10% year-over-year to 37.8 billion contracts, which led to an 11% increase in third-quarter contract growth, culminating in 118 billion contracts. On the other hand, European options and futures volumes saw a significant year-over-year increase of 20% in September, reaching 66.6 million, and a 17% increase for the third quarter of 2024, with a total of 196 million contracts.
The report from RBC Capital Markets reflects a mixed performance in the global options and futures markets, with notable growth in the US equity options sector and a contrasting downturn in the European market.
In other recent news, Nasdaq made significant changes in its revenue accounting for AxiomSL contracts, resulting in a one-time, non-cash GAAP revenue reduction of $32 million in the third quarter of 2024. In addition, the company has announced leadership changes within its Financial Crime Management Technology business, appointing Stephanie Champion as the new Executive Vice President and Head of Nasdaq Verafin.
Recent analyst notes reveal that Citi has maintained a Neutral rating on Nasdaq, while Oppenheimer issued a positive outlook, expecting the company to maintain double-digit revenue growth. Oppenheimer maintained its Outperform rating and raised the price target to $80.00.
Other recent developments include Nasdaq's agreement to pay $22 million to settle charges with the U.S. Commodity Futures Trading Commission related to undisclosed incentive programs. The company has also filed with the Securities and Exchange Commission to launch Nasdaq Bitcoin Index Options.
InvestingPro Insights
To complement RBC Capital Markets' analysis of Nasdaq OMX Group Inc. (NASDAQ:NDAQ), InvestingPro data offers additional insights into the company's financial performance and market position. NDAQ's market capitalization stands at $40.82 billion, reflecting its significant presence in the financial markets.
The company's revenue growth of 7.57% over the last twelve months and a substantial 25.05% quarterly revenue growth in Q2 2024 align with the positive trends observed in US equity options volumes. This growth is further supported by a robust gross profit margin of 66.0% and an operating income margin of 29.01%, indicating efficient operations.
InvestingPro Tips highlight that NDAQ has raised its dividend for 12 consecutive years, demonstrating a commitment to shareholder returns. This is particularly relevant given the company's strong performance in certain market segments. Additionally, NDAQ has shown a strong return over the last three months, which correlates with the increased trading volumes reported in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips that could provide further context to NDAQ's market position and future prospects.
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