Euronext

Euronext posted a very strong quarter again, delivering a strong 7% beat on pretax result (+16% yoy) vs consensus and 12% above our projections.

The pan-European exchange beat was again delivered on the back of a 3% beat on revenue (+15% yoy) allowed through continued strong commercial momentum in non-volume related businesses (securities services were up by 10% yoy, capital markets and data solutions rose by 17% yoy) and very strong tailwinds in both FICC markets (+6% yoy) and equity markets (+28% yoy), which both benefitted from continued expansion (FICC) and market volatility.

Total opex came in-line with consensus (+12% yoy), resulting in a 3pp positive jaws effect and in a 1pp improvement in adjusted EBITDA margin (65%).

We see a positive reaction at open tomorrow morning on the good set of results and the beat on pre-tax result consensus.

Expert Opinion:
Euronext keeps delivering strong results.  The current environment with increased volatility is constructive for market venues, especially for Euronext with its stronger focus on equity.  While we will likely upgrade our numbers, we feel it won't be enough to change our fundamental stance on the stock: we like the fundamentals but believe they are well priced in. Rerating on Euronext has been strong for the last 24 months and is now more expensive than its peers on the 20227 PE ratio. 

From a fundamental standpoint, Sylvain likes Deutsche Borse better  (buy 29% upside) while LSE (Add, 31% upside) offers a shareholder return (Div Yield + SBB) of 8%, which is attractive.  This ratio stands at 3% for Deutsche Borse and 4% for Euronext.




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