On Monday, Oppenheimer maintained its Outperform rating on Nasdaq OMX Group Inc. (NASDAQ: NDAQ) shares, increasing the price target to $89 from $86. The firm's analysts have reiterated the stock as their top pick for the year 2025, citing strategic advantages and positive market shifts.
The analysts at Oppenheimer highlighted the change in sentiment towards Nasdaq OMX stock over the past year, which has seen the stock's valuation increase from approximately 20 times earnings to around 25 times. The firm believes that the stock is only halfway through its potential multiple expansion cycle and expects further growth.
The optimism for Nasdaq OMX is partly due to the integration of Verafin, a SaaS platform that the firm believes is strategically critical. The analysts noted that the acquisition was initially met with concerns over cost and integration risks, but due diligence has shown these fears to be overstated.
The anticipated growth for Nasdaq OMX is supported by three main tailwinds identified by Oppenheimer: an increased demand for regulatory technology tools due to rising fraud and terrorism funding, a shift from active to passive investing, and a recovery in the initial public offerings (IPO) market. These factors are expected to contribute to the company's robust financial performance.
Oppenheimer's analysis suggests that with Nasdaq OMX's medium-term revenue growth forecasted at 8-11%, an adjusted EBITDA margin of 54%, and about 80% recurring revenue, "NDAQ will trade closer to high quality information services companies (30“35x."
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