DBOEY - Deutsche BöRse: European Exchange Leader With Room To Run

2024-03-06 14:25:34 ET

Summary

• Deutsche Börse is on a mid-term path to turning its business into a less cyclical one.
• Integrating its acquisitions will be key, especially with a fading tailwind for its rate-sensitive income stream.
• The stock isn’t cheap at first glance, but has the fundamentals to grow into its multiple.

European exchange group Deutsche Börse ( OTCPK:DBOEF ) has long been a personal favorite for its dominance across most touchpoints of the region’s capital markets. Specifically, the group leads on derivatives (Eurex), commodities ((EEX)), and equities exchange (Xetra), as well as post-trade clearing (Clearstream), among others. The only real drawback in prior years has been its cyclical income streams, which tend to ebb and flow in line with broader capital activity. Management is looking to change this, though, most recently outlining a path to rebalancing from cyclical to secular over time. While not quite there yet, there has been progress, with a string of acquisitions, most recently for Danish software company SimCorp, being a case in point....

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