At $93 and change, Cramer sees NYX jumping back at least to its 52-week high of $110 plus, as so many of the neutral and negative analysts are forced to raise numbers and change their ratings to “buy.”
What a lot of people aren’t realizing with this company is the value of its derivatives business, Cramer says. This is actually more important than NYSE’s supposed market share in listings because derivatives are the exchange’s biggest source of revenues. That’s not to say NYX won’t have a great listings business. Who doesn’t want to list there? And the addition of Euronext will give it a huge leg up on European equities and an exceptional financial futures business, with the possibility of a U.S. clearing business. People seem to forget that Euronext owns the London Financial Futures Exchange, which is the world’s third-largest derivatives exchange, with a margin nearing 50% on earnings before income taxes and growing at a 20% clip.
On top of all this, fees are going higher while costs are going lower – the perfect combo. Trading fees are 30% below the Nasdaq’s and 90% below international peers, even though the NYSE is a more prestigious place to list. This is the world’s biggest exchange group with $3 billion in revenues when you include Euronext, which is growing like a weed. Think of it as a Euronext story with an NYSE tail, 60% of the pre-synergy earnings before interest and taxes from the combined company will come from Euronext – it’s the bigger deal.
Bottom Line: After three months of running in place as one of Cramer’s stocks of the year, NYX is about to close on the Euronext acquisition – and then this stock should run. Cramer reiterates his buy to the ninth power: It’s time for you to back up the truck on the NYSE if you haven’t already.
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