UBS points out Deutsche Boerse's long-term growth potential
Whether or not Deutsche Boerse's proposed buy-out of rival London Stock Exchange panned out in the end or not, the exchange operator's future was bright, UBS told clients on Tuesday.
Deutsche Boerse AG
€208.20
16:45 20/09/24
Financial Services
16,083.77
16:49 20/09/24
FTSE 100
8,229.99
17:14 20/09/24
FTSE 350
4,543.89
16:49 20/09/24
FTSE All-Share
4,501.08
17:04 20/09/24
London Stock Exchange Group
10,315.00p
16:54 20/09/24
Xetra DAX
18,720.01
17:00 20/09/24
The company was set to become a key beneficiary of regulatory changes in the pipeline (T2S, EMIR and MiFID II), analyst Michael Werner said in a research report sent to clients.
Recent moves by management to rearrange the business would also stand it well in the longer-term, the Swiss broker argued.
Close-ties with buy-side firms should also give it an advantage over the longer-term, given how sell-side institutions were facing significant capital and cost-control headwinds, Werner said.
As for the proposed tie-up, the analyst pointed out how "a number of exchange-related deals that have not reached completion due to counter-bids, shareholder disapproval and/or regulatory challenges."
Nonetheless, he believed that a combination would probably be positive for Deutsche Boerse, with 11% expense synergies possible which would in turn be 8-10% accretive.
He also called attention to the fact that prior to the proposed deal announcement markets were assigning 31% of LSE's value to its long-term growth potential, versus -5% for Deutsche Boerse.
Werner stood by his 'buy' recommendation on the shares of the German exchange operator and €88.30 share price target.