Earnings Preview: NYSE Euronext seen reporting 1Q profit up

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May 5, 2008

NEW YORK—NYSE Euronext reports first-quarter earnings on Tuesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: NYSE Euronext is a stock exchange operator with both cash and derivatives exchanges in the U.S. and Europe.

Stock exchange operators like NYSE Euronext derive much of the revenue and earnings from trading volume. With volatility pushing trading volume higher during the quarter, NYSE Euronext is likely to report improved earnings.

BY THE NUMBERS: Analysts polled by Thomson Financial, on average, forecast earnings 83 cents per share for the quarter on revenue of $891.3 million. Estimates range from profit of 77 cents per share to 90 cents per share.

ANALYST TAKE: "We continue to believe NYSE Euronext will report an upside quarter," Sandler O'Neill & Partners LP analyst Richard Repetto wrote in a research note. "We believe there are several drivers of the outperformance in (the first quarter), most of which are likely to continue to be in place in (the second quarter) and possibly going forward as well."

Repetto said trading volume reached record levels during the first quarter, with European cash and derivatives trading helping to boost earnings. NYSE Euronext could also get a slight boost in its first-quarter earnings from a strong exchange rate from the Euro to the dollar, Repetto added.

Repetto estimates NYSE Euronext will earn 88 cents per share during the first quarter. Repetto expects NYSE Euronext to earn $3.39 per share in 2008 and $4.24 per share in 2009.

WHAT'S AHEAD: NYSE Euronext already posted April volume data, indicating both cash and derivatives products trading rose compared with the year-ago period. The company's derivatives trading operations on Liffe -- the company's European futures exchange -- experienced its busiest April ever.

"Quarter-to-date volumes for NYSE Euronext's European businesses are in line with our (second quarter) forecast, while its U.S. businesses are running slightly below expectations," Lehman Brothers analyst Roger Freeman wrote in a research note.

Freeman anticipates NYSE Euronext will earn $3.35 per share in 2008 and $4.25 per share in 2009.

STOCK PERFORMANCE: Shares of NYSE Euronext fell 30 percent during the first quarter.