Why IntercontinentalExchange’s Stock Is Worth $83

IntercontinentalExchange Group (NYSE:ICE) has seen impressive growth in recent years. Strengthening its data services segment with a series of acquisitions, including NYSE, SuperDerivatives, IDC and Trayport, has paid off well for the company. We expect ICE to broaden its offerings to cater to additional markets going forward, and add further technology platforms and expand its risk management, new data and valuation services. This is likely to propel further growth in this segment in the future. With the improvement in U.S. macro conditions and innovative trading algorithms, we also expect improvement in equity trading volumes and revenue.

We have an $83 price estimate for Intercontinental Exchange’s stock, which is about 20% ahead of the current market price. We have also created an interactive dashboard which shows the forecast trends; you can modify the key value drivers to see how they impact the company’s revenues, bottom-line and valuation.

Improvement In U.S. Macro Conditions To Drive Growth In U.S. Cash Equity Volumes

Equity Options Market Likely To Recover, ICE Should Be Able To Improve Market Share

Increased volatility around oil production and prices should drive energy derivative trading. Meanwhile, rate hikes and improving macro conditions should propel interest rate derivatives volumes.

Net revenues are expected to increase by 6% in 2018 due to increased trading volumes and uptake of data products.

Improvement in the Data Services margin and a lower tax rate due to the recent tax overhaul should drive net income for the company.

We have used a P/E ratio of 20 for our valuation estimate, but you can modify the multiple in order to come up with your own valuation estimate for the company.

See the full Trefis analysis for Intercontinental Exchange