Nasdaq, Inc. NDAQ has been trading above its 50-day simple moving average (SMA), signaling a short-term bullish trend. Its share price, as of April 7, was $90.21, down 11.4% from its 52-week high of $101.79.
The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend.
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NDAQ Is an Outperformer
Shares of Nasdaq have gained 11% in the past year against the industry's decline of 7.8%.
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NDAQ Shares Are Overvalued
Nasdaq shares are trading at a multiple higher than the Zacks Securities and Exchange industry. Its forward price-to-earnings of 22.38X is higher than the industry average of 20.9X.
Shares of Intercontinental Exchange Inc. ICE are trading at a discount to the industry average, while those of Cboe Global Markets, Inc. CBOE and CME Group Inc. CME are trading at a premium.
Projections for NDAQ
The Zacks Consensus Estimate for Nasdaq’s 2026 earnings per share indicates a year-over-year increase of 10.9%. The consensus estimate for revenues is pegged at $5.73 billion, implying a year-over-year improvement of 9.2%.
The consensus estimate for 2027 earnings per share and revenues indicates increases of 12% and 7.6%, respectively, from the corresponding 2026 estimates.
The long-term earnings growth is expected to be 12.7%, better than the industry average of 12.1%.
Optimist Analyst Sentiment on NDAQ
Eight of the 12 analysts covering the stock have raised estimates for 2026, while nine analysts have done the same for 2027 over the past 30 days. Thus, the Zacks Consensus Estimate for 2026 and 2027 earnings has moved up 1.3% and 1.2%, respectively, over the past 30 days.
Average Target Price for NDAQ Suggests Upside
Based on short-term price targets offered by 17 analysts, the Zacks average price target is $109.65 per share. The average suggests a 22.53% upside from the last closing price.
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Nasdaq’s Favorable Return on Capital
Return on equity in the trailing 12 months was 17.5%, better than the industry average of 16%. This highlights the company’s efficiency in utilizing shareholders’ funds.
Also, the return on invested capital (ROIC) has been increasing over the past few quarters, as the company has raised its capital investment over the same time frame, reflecting NDAQ’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 7.9%, better than the industry average of 6.6%.
Key Points to Note for NDAQ
Nasdaq’s organic growth has also been aided by its strategy of accelerating its non-trading revenue base, which includes Trading Services and Marketplace Technology businesses, Data & Listing Services, Index and Workflow & Insights businesses, and Anti-Financial Crime business, thereby infusing dynamism into its business profile.
Growth in non-trading segments was driven by higher Index revenues, demand for IR and ESG solutions, steady analytics solutions sales to asset managers and increasing recurring data revenues. Anti-Financial Crime revenues should continue to gain from solid demand for fraud detection and anti-money laundering solutions, as well as the SaaS-based surveillance solutions.
Nasdaq focuses on cross-selling multiple products to existing clients and integrating acquisitions to broaden its solutions portfolio, thereby increasing customer stickiness and revenue visibility.
Nasdaq has grown meaningfully over the years through a number of strategic expansions. These acquisitions have helped the company gain direct access to the Canadian equities market, expand its technology offering and improve its market surveillance techniques.
Nasdaq boasts a healthy balance sheet and cash position, along with a modest operating cash flow from its diverse business model. A healthy balance sheet ensures the distribution of wealth to shareholders in the form of dividend hikes and share repurchases.
Conclusion
Nasdaq is set to grow on impressive organic growth, an increasing on-trading revenue base and strategic buyouts to capitalize on market opportunities. The company’s focus on Market Technology and Information Services businesses helps explore vast opportunities through its developmental strategies.
NDAQ’s dividend story is impressive. Per its growth strategy, Nasdaq will bring the payout ratio of 35-38% by 2027 and resume share buybacks to offset dilution from the Adenza buyout.
Higher return on capital, favorable growth estimates and attractive valuations should continue to benefit NDAQ over the long term.
It is, therefore, wise to retain this Zacks Rank #3 (Hold) stock in your portfolio at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Intercontinental Exchange Inc. (ICE): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).