Nasdaq OMX Group
Nasdaq OMX Group
(NDAQ - Get Report)
is no stranger to the M&A market. After
agreed to a February $9 billion tie-up, Nasdaq and
teamed up on a richer $11.3 billion April bid for NYSE Euronext. That bid was quashed by the
Department of Justice
in May. Not so much an acquirer, Morningstar now highlights Nasdaq OMX as a "as an appealing target by a larger exchange operator, perhaps from outside the U.S." The benefit may be Nasdaq's $4 billion market cap and diversification among different geographies and financial products like stocks, futures, options and index derivatives, according to Morningstar
The New York-based exchange operator operates the Nasdaq stock market, in addition to the Boston and Philadelphia Stock Exchanges and other U.S. options, cash equities future and derivatives clearing businesses. After a 2007 merger with OMX for $3.7 billion, Nasdaq took control of seven exchanges in Nordic countries like Sweden, Denmark and Finland, among others.
Morningstar gives Nasdaq OMX Group a four star rating and a fair value of $33 a share, an over 30% premium to current share prices of $25.32. The company is expected to earn $62 cents a share in its first quarter 2012 results due in February, according to
consensus estimates. Analysts give Nasdaq OMX Group an estimated price target of $29.53 a share on 2012 revenue of $3.5 billion and profit of $488 million, according to data compiled by
. For more on Nasdaq OMX shares, see
4 stocks for volatile markets
. For more on exchanges M&A see why the MF Global failure
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While Morningstar doesn't specify a takeover candidate for Nasdaq, previously announced bids may indicate what can and can't work as a deal. Currently, the NYSE Euronext and Deutsche Boerse tie-up is on jagged rocks with European competition authorities, while a February merger attempt between the
London Stock Exchange
Toronto Stock Exchange
was iced. Both the LSE and TSX have since found new tie-ups. Depending on the NYSE merger, Deutsche Boerse may have an easier time looking at other U.S. exchanges, with less of a presence in European derivatives than NYSE Euronext.
Morningstar also highlights the
as being an "easily digestible" target of a U.S. exchange because of its small size and lack of product diversification.