William Blair initiated research coverage of Nasdaq, Inc. (NDAQ $80.88), a leading global technology company with a broad range of offerings, including equities and options exchanges, data, investment analytics, software, marketplace technology, and corporate solutions.
Analyst Jeff Schmitt estimated that the company would generate earnings per share of $2.78 in 2024, $3.10 in 2025, and $3.50 in 2026, with cross-selling, margin expansion, and deleveraging driving 12%-13% EPS growth in 2025 and 2026.
“Since its strategic pivot in 2017, Nasdaq has transitioned from an exchange operator to a leading technology firm serving a wide range of clients across global capital markets,” Schmitt said. “Non-transactional revenues are about 80% of the mix, recurring revenues are about 60%, and its leading technology solutions are scalable with favorable long-term growth prospects. This has resulted in a more consistent and favorable growth profile relative to the exchanges. Nasdaq’s shift into higher-growth technology markets has added large and expanding total addressable markets driven by strong secular tailwinds. The culmination of this shift was Nasdaq’s acquisition of Adenza in late 2023, its largest deal to date. Recently launched cross-sell campaigns are showing initial signs of success, with 10% of the current financial technology segment pipeline comprising cross-selling opportunities, and Nasdaq plans to realize over $100 million of cross-sell synergies by late 2027.”
Schmitt continued, “Following the Adenza deal, Nasdaq is shifting its capital-allocation focus to deal integration, synergy realization, deleveraging, and increasing capital return. No larger M&A activity is expected near term as it digests and integrates recent deals and de-risks, which should be a good tailwind for margins and EPS growth. The company has a strong record of deleveraging following deals and has already made good progress since Adenza.”
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