Euronext NV "Pushback to our Buy thesis; Where do Investors Disagree with Us?"

Research evidence excerpt

Euronext NV "Pushback to our Buy thesis; Where do Investors Disagree with Us?"

abashed bulls on 12/28E 11.13 9.25

European cash equity volume growth in the coming years...but most investors we speak

with are not. They view the European cash equity markets as slow growth, competitive Michael Werner

and difficult to forecast and thus deserving of a low valuation multiple. While we think Analyst

michael.werner@ubs.comthose views will change, it may take some time.

+44-20-7568 8086

Can ENX narrow the valuation gap with DB1? Haley Tam

Analyst

Investors have asked whether ENX's valuation multiple (17.7x fwd P/E) can expand from

haley.tam@ubs.com

current levels, especially given DB1's multiple (19.1x) and the fact that DB1 has traded at +44-20-7567 6176

an avg 3x P/E premium over the past 12 years. While we expect DB1 to maintain a P/E

Amit Jagadeeshmultiple premium over ENX, we think the premium narrows. We also think that,

assuming cash equity volumes grow faster than expected, investors will be willing to put amit.jagadeesh@ubs.com

a higher P/E multiple on the entire business. +44-20-7567 9705

Valuation: ENX is our top pick; PT: €175 (c25% upside)

ENX is our top pick among the EU exchanges. We expect the company to benefit from a

number of structural tailwinds (improving European cash equity volumes and retail

participation) and idiosyncratic opportunities like the CSD expansion. We argue,

amongst the EU exchanges, ENX should benefit the most from the European Savings

and Investment Union (SIU), even if these measures are gradual.

Highlights (€m) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Revenues 1,475 1,627 1,819 2,094 2,302 2,489 2,656 2,829

EBIT (UBS) 734 919 1,049 1,252 1,429 1,576 1,697 1,822

Net earnings (UBS) 585 682 736 871 998 1,103 1,190 1,278