Euronext: We Raise Our Fair Value Estimate on Strong Performance Outside Cash Equities

We are raising our fair value estimate to EUR 102 per share from EUR 88 per share for Euronext after revisiting our model. Half of the increase in our fair value estimate is due to time value of money with the other half a result of continuous strong performance in trading and clearing recently and an improved outlook. After the completion of the Borsa Italiana Group acquisition and integration of its clearing and settlement operations into the Euronext group, we believe the European stock exchange is structurally in a better position to capture value stemming from its dominant cash equities liquidity pool in Europe. Euronext's exposure in European fixed-income trading and power trading is promising in our view and diversifies the group from the volatile cash equities business. We don't expect competitive pressures in cash equities to subside over the next half-decade, weighing on growth prospects for Euronext. However, high-single-digit to low-double-digit growth in fixed-income, foreign-exchange trading, power trading, clearing, and investor services will allow for a 5% revenue compound annual growth rate over the next five years at group level. Our narrow moat rating is unchanged. Shares are fairly valued.