Intercontinental Exchange stock to beat expectations in fourth quarter
Intercontinental Exchange (NYSE: ICE) is expected to release its fourth quarter 2022 results on Thursday, February 2, 2023. We expect Intercontinental Exchange to beat consensus revenue and earnings estimates. The exchange beat Street expectations last quarter, with net revenue (total revenue minus transaction-based expenses) rising 1% year-over-year to $1.81 billion. This was primarily driven by growth in exchange-related revenue and the fixed income and data services category, partially offset by lower mortgage technology revenue. We expect the same trend to continue in the fourth quarter.
Our forecast indicates that Valuation of Intercontinental Exchange is $127 per share, or 19% above the current market price of $107. Our interactive dashboard analysis on Overview of Intercontinental Exchange results has more details.
(1) Expected revenue higher than consensus estimates
Intercontinental Exchange revenue grew 6% year-on-year to $7.26 billion in the first three quarters of 2022, resulting in a 4% increase in net revenue to $5.52 billion. It was mainly driven by a 10% year-over-year increase in net clearing and transaction fees, followed by marginal growth in non-trading revenue.
- Clearing and transaction fees (net) increased 10% year-over-year to $2.05 billion in the first nine months of 2022. Q1 2022. We expect the same momentum to continue in the fourth quarter.
- ICE generates approximately 60% of its net revenue from non-commercial revenue. The segment recorded marginal growth in the first three quarters of the year. This was primarily due to lower mortgage technology revenue, which offset improved fixed income and data services businesses. We expect non-trading revenue to see positive growth in the fourth quarter.
- Overall, we expect Intercontinental Exchange’s total revenue to reach $9.6 billion in fiscal 2022.
Trefis estimates that Intercontinental Exchange’s fourth quarter 2022 net revenue will be approximately $1.80 billion, 1% higher than the consensus estimate of $1.78 billion.
2) EPS slightly higher than consensus estimates
Intercontinental Exchange’s Q3 2022 adjusted earnings per share (EPS) is expected to be $1.28 per Trefis analysis, slightly above the consensus estimate of $1.26. The exchange’s adjusted net income was reduced by 60% year-on-year to $1.02 billion in the first nine months of 2022. This was mainly due to a significant drop in “other income” of $1.02 billion. dollars to -$1.53 billion. That said, we expect profitability numbers to improve in the fourth quarter. Overall, Intercontinental Exchange’s annual EPS figure is expected to be around $5.32 for fiscal 2022.
(3) The stock price estimate is 19% higher than the current market price
We arrive at Valuation of Intercontinental Exchangeusing an EPS estimate of around $5.32 and a P/E multiple just below 24x for fiscal year 2022. This translates to a price of $127, or 19% above the current price of the market around $107.
Note: P/E multiples are based on year-end stock price and reported (or expected) adjusted earnings for the full year
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| Return | Jan 2023 MTD [1] |
2023 YTD [1] |
2017-23 Total [2] |
| Return ICE | 4% | 4% | 89% |
| S&P 500 return | 5% | 5% | 80% |
| Trefis Multi-Strategy Portfolio | 9% | 9% | 243% |
[1] Monthly and cumulative total as of 01/31/2023
[2] Cumulative total returns since the end of 2016
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Intercontinental Exchange stock to beat expectations in fourth quarter
