Oppenheimer has maintained its Outperform rating on Nasdaq OMX Group Inc. (NASDAQ: NDAQ) and increased the price target to $80.00 from the previous $78.00.
The adjustment comes after Nasdaq disclosed further details about an accounting change related to its AxiomSL revenues on September 6.
The new accounting approach will allow AxiomSL's revenues to align more closely with the Annual Recurring Revenue (ARR) and cash economics of its on-premises subscription contracts.
Nasdaq will now recognize AxiomSL on-prem subscription revenue ratably, as opposed to the previous method of recognizing 50% upfront and the remainder over the term of the contract.
Additionally, Nasdaq is set to record a one-time, non-cash Generally Accepted Accounting Principles (GAAP) revenue reduction of $32 million in the third quarter of 2024. Despite this reduction, the company's medium-term growth outlook remains unchanged.
For the year 2024, Nasdaq's Regulatory Technology (RegTech) revenue growth is expected to be at the lower end of its medium-term guidance, which forecasts high single to low double-digit growth. This projection accounts for the anticipated negative growth in professional services fees.
In light of these developments, Oppenheimer has revised its estimates but decided to raise the price target for Nasdaq OMX Group due to a treating.
InvestingPro Insights
Following Oppenheimer's positive outlook on Nasdaq OMX Group Inc. (NASDAQ: NDAQ), InvestingPro data and tips offer additional context for investors considering the stock. With a market capitalization of $41.44 billion and a high P/E ratio of 41.25, Nasdaq is trading at a premium compared to some of its peers. This is further underscored by an adjusted P/E ratio for the last twelve months as of Q2 2024, which stands at 36.58. Despite analysts anticipating a sales decline in the current year, the company has demonstrated resilience with a gross profit margin of 66.0% and an operating income margin of 29.01% for the same period.
InvestingPro Tips highlight that Nasdaq has raised its dividend for 12 consecutive years, which speaks to the company's commitment to providing shareholder value. Additionally, the stock is trading near its 52-week high, with a price 97.01% of the peak, reflecting strong investor confidence. Over the last three months, the stock has seen a robust return of 22.9%, and over the last five years, it has maintained a strong performance. For investors looking for more insights, there are additional InvestingPro Tips available at https://www.investing.com/pro/NDAQ, which can provide a deeper analysis of Nasdaq's financial health and future prospects.
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