NYSE Euronext (NYSE:NYX) is expected to announce its first quarter earnings, for 2012, on Monday, April 30th. NYSE is the largest stock exchange in the world and reported a net income of $110 million for the last quarter of 2012. The Big Board, as it is commonly known, is trying to confront a slump in trade and the fall out of it its failed merger with German exchange operator Deutsche Boerse. The merger was blocked on antitrust grounds by the European Union in February. However, NYSE’s European cash products trading volume remained strong, on the back of a 13% increase in the last quarter. NYSE Euronext mainly competes with Nasdaq OMX (NASDAQ:NDAQ), CME Group (NASDAQ:CME).
Increase in Derivatives Market
U.S. Derivatives market has seen a steady increase through the past few years as trading in options and futures tends to produce higher gains in an uncertain market. The increase in trade volumes has also been supplemented by algorithmic trading techniques adopted by the company, which leads to increased organization in the options market. Derivative trading accounts for 41% of the Trefis price estimate for NYSE Euronext, and increased trading will positively affect NYSE Euronext’s earnings for this quarter.
Information Services and Technology Solutions
Technology Solution revenues generated primarily from connectivity services, software licenses and strategic consulting services, are expected to be boosted by the liquidity center opened in Tokyo, last December. For more details on how this center will impact NYSE Euronext’s revenues, please refer to our article NYSE Opens Liquidity Center In Tokyo, Targets $1 Billion in Technology Solutions Revenues.
Going forward, the company has plan to cut costs by approximately $250 million and play down expectations for any big deals as it will now focus more on smaller acquisitions to boost its technology division. NYSE Euronext is also looking to increase its market share in Spain as it plans to launch a promotional pricing strategy for Spanish stocks. For more insights, please read our article NYSE is Ready to Take Competition Head-On in Spain.
Our price estimate for NYSE Euronext’s stock is $34, 25% above the current market price.