TMX Group Glides Through Troubled Economy

Feb.13.09 | About: TMX Group (TMXXF)

One company having no troubles these days is TMX Group Inc. (TMXGF.PK). The stock has risen 33% since the start of the new year and by Stephen Boland's estimation, the run its on won't end there.

"X continues to appreciate quite strongly in the market," the GMP Securities analyst said in a note to clients. So strongly in fact that it only sits 6% off Mr. Boland's C$34 price target. Nonetheless, he continues to rate the shares a "buy."

He wrote in rationale for his unchanged rating:

Over the next quarter we will be moving our valuation out one year to our 2010 estimates. We are reluctant to make that move at the current time until we see further clarity in the markets in general but also the competitive landscape.

While Mr. Boland believes that alternative trading systems may have have gained some market share, he still thinks there is is hidden upside to his estimates at the current time including

not factoring any share buy backs in 2009 (although 500k has already been purchased) as well as the revenue contribution from the Boston Options Exchange which is relatively flat in our model.

The analyst also said improving market conditions or even a sense that things are improving will result in multiple expansion over the next several months.