NDAQ - Nasdaq stock slips after BofA downgrade on valuation headwinds to '23 EPS

• Nasdaq ( NASDAQ: NDAQ ) stock has dropped 3.1% in Friday premarket trading after BofA Securities analyst Craig Siegenthaler downgraded the stock to Underperform due to its premium valuation and several risk factors.
• He pointed to volume headwinds, retail disengagement and market tech growth decelerations as weighing on 2023 EPS potential.
• The exchange-company is expected to have "meaningful" growth in 2024, but "a more tepid EPS increase in 2023," he said in a note to clients.
• Specifically, he sees Nasdaq's ( NDAQ ) options business profitability under pressure from increased competition with MEMX set to launch in Q2 2023, retail disengagement, including headwinds from regulators, and cyclical headwinds as volatility ratchets down.
• "Finally, NDAQ's transformation into a higher-growth fintech from a mature cash equities exchange has been mostly successful, and we believe markets have already adequately rewarded NDAQ's relative valuation," Seigenthaler wrote.
• The analyst's Underperform rating leans more bearish than the SA Quant rating of Hold and contrast with the average Wall Street rating of Buy.
• In September, Nasdaq's ( NDAQ ) U.S. equity options volumes rose 2.9% M/M and 15% Y/Y.

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