Earnings Preview: InterContinental Exchange

Intercontinental Exchange (NYSE:ICE) is expected to report Q2 earnings before the market open on Tuesday, August 4 with a conference call scheduled for 8:30 am.


Analysts are looking for EPS of $1.13 on revenue of $242.92M. The consensus range for EPS is $1.07 to $1.16, while the consensus range for revenue is $215.49M to $249.60M, according to First Call.

Analyst Views

A major regulatory issue that affects IntercontinentalExchange has made news recently. The Commodity Futures Trading Commission, or CFTC, held hearings regarding the setting of energy position limits. CFTC Chairman Gary Gensler said he's considering imposing limits on speculative trading in some markets, including crude oil, natural gas and other energy sources. He added that the hearings would be "an opportunity to determine how speculative position limits could be used to address excessive speculation." The CFTC's last hearing is scheduled for Wednesday.

Earlier this month a Pali analyst said that only about 6% of InterContinental Exchange's revenue would be placed at risk if the CFTC imposes position limits on oil and gas futures trades. The firm upgraded the stock to Neutral from Sell.

On July 7 William Blair defended InterContinental's shares on weakness as the firm thinks that concerns about increased regulations of energy markets are "an old debate." On the other hand, Citigroup wrote that InterContinental Exchange is more exposed than CME Group (NASDAQ:CME) to potential changes in energy market regulations since InterContinental Exchange generates 58% of its sales from energy derivatives compared to CME's 23%. Investors will be listening for InterContinental's view of its risk from increased energy market regulation.

On a positive note, IntercontinentalExchange CEO Jeffrey Specher made some bullish comments about his company in June. InterContinental Exchange is well-positioned to capitalize on underserved markets such as credit products, he said, adding that the company is continuing to generate robust cash flow.

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