J.P. Morgan is out with a research report this morning, where it resumes coverage of The Intercontinental Exchange ICE with an Overweight Rating; it has a $129.00 price target on the stock.
The JPM analysts were obligated to discontinue coverage on the name in April due to the company’s involvement in a transaction involving the ICE. At that time the company was Overweight rated with a $127.00 price target.
The analyst noted that they believe the management team at the company includes one of the best CEOs of any company in their coverage. They noted that the strong track record positions it well to take advantage of the material regulatory changes in derivatives.
They also noted that futures revenues are growing at a 26% pace and OTC transactions are growing at a 15% pace.
As for valuation, the JPM analysts remarked, “We value ICE at $129, or 20x our 2011 estimate. Given disproportionately large cash flow, the EPS numbers understate the earnings power of the company.”
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