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GMP analyst Steve Boland kept his "buy" recommendation on TMX Group (OTC:TMXGF) but shaved C$1 off his share price target after the Toronto Stock Exchange owner posted third-quarter earnings in line with expectations.

In a note Mr. Boland commended the company for maintaining it revenues despite the turmoil on financial markets, though at the same time he said he remains "cautious" about estimates going forward.

Mr. Boland reduced his target to C$34 from C$35 to reflect a recent move by the TMX to chop its trading fees.

In the most recent quarter, the exchange owner posted earnings of 66¢  per share on revenue of $139.4-million, compared to 62¢ on revenue of $105.9-million last year.

One reason for the higher earnings is that this is the first full quarter to include results of the Montreal Exchange, acquired earlier this year.
Meanwhile, Dundee Securities analyst John Aiken maintained his "sell" recommendation on the TMX.

"Despite the higher than anticipated fees this quarter, we continue to see difficulties in the TMX's main revenue lines, which will create further
pressure on future earnings," Mr. Aiken said in a note.

The TMX will face increased competition with the launch of the bank-backed Alpha trading system, set for later this year.

Because exchanges generate revenue from trading fees, the recent market meltdown has been generally good for TMX, though observers point its trading platform strained to handle the heavy volume on some days.

They warn that this could provide a competitive opportunity for Alpha.

Source: TMX to Face Competition from Alpha Startup