Goldman Adds NYSE Euronext To Conviction Buy (NYX)

Goldman Sachs is upgrading shares of NYSE Euronext NYX to Buy, and putting it on the Conviction Buy List with a $37 price target on shares. In the note sent to clients, Goldman writes, "We upgrade shares of NYSE Euronext to Buy from Neutral and add them to our Conviction List with a $37 price target (previously $34). After three years of investing to improve the firm's hardware and trading. Goldman goes on to say, "We expect a number of potential catalysts over the next few quarters; while they may not all transpire, any combination should help shares out-perform peers. (1) NYX hosts its annual investor day on March 8, where it is likely to provide detailed 2011 expense guidance and summarize 2012 potential improvement, as NYX continues to suffer from a somewhat elevated cost structure relative to peers. (2) New York Portfolio Clearing house (a joint venture with the DTCC) is slated to launch in 1Q2011, and we do not think investors are currently incorporating any significant benefits into estimates given the inherent challenge NYPC faces as it competes with CME; potential upside is thus incremental. (3) After three years of elevated capital expenditures (purchases of PPE were roughly $1.1 bn), we expect CapEx to decline in 2011, which could allow NYX to return capital via repurchases on top of the 4% dividend yield it already distributes." Shares of NYX are up 70 cents in pre-market trading to $32.93.