IntercontinentalExchange Shares Slumping

NEW YORK (TheStreet) -- IntercontinentalExchange(ICE) is having a hard time following up its strong stock performance in 2009.

The shares were recently trading down $3.91, or 3.5%, to $106.48, falling for a second straight session after the Atlanta-based futures exchange operator gave an update on its trading volumes for the first quarter on Monday. Although ICE, which also has over-the-counter markets and clearinghouse businesses, reported a 26% year-over-year jump in futures volume for the three-month period and said its over-the-counter energy business posted record average daily commissions of $1.37 million, the stock has sold off in the wake of the news.

William Blair & Co. lowered its earnings estimate for the company's first quarter early Tuesday, citing a shortfall in over-the-counter credit revenue, which came in at $41.4 million vs. the firm's expectation of $51 million, as well as slight concerns about ICE's clearing business for credit default swaps in 2010.

"There is enormous operating leverage in the clearing business and management has a history of providing conservative guidance," William Blair said in its research note. "That said, the year seems to have gotten off to a slow start with only about $10 million of CDS clearing revenue compared to about $10 million last quarter -- we expected $15 million given higher underlying activity levels and the expansion of the addressable cleared CDS market over the past few quarters."

The firm now sees earnings of $1.28 per share for the first quarter, down from its prior view of $1.30 per share, and below the current average analysts' view of $1.31 per share compiled by Thomson Reuters. William Blair's long-term view of the company remains bullish though as the firm kept its rating on ICE shares at outperform and actually lifted its full-year profit estimate by a dime to $5.20 per share to reflect "very strong futures volume and OTC commissions so far in 2010."