2023-04-11 08:34:25 ET
Morgan Stanley skewed its preference to defensive and transactional exchanges on Tuesday in the wake of an uncertain macroeconomic outlook, thus downgrading Nasdaq ( NASDAQ: NDAQ ) to Equal-Weight from Overweight and upgrading Virtu Financial ( NASDAQ: VIRT ) to Equal-Weight from Underweight.
For Nasdaq ( NDAQ ), analyst Michael Cyprys sees risks to its Solutions business growth outlook that accounts for more than 70% of the exchange's revenue. As a result, he expects Solutions organic growth to come in at 4.6% Y/Y in 2023, trailing the company's long-term target of 7%-10%.
"Meanwhile, NDAQ is least exposed to a cyclical uplift to volumes,as trading revs comprise <30% of revs," the sell-side analyst noted.
See why Seeking Alpha contributor Verdant Peak Research last month called Nasdaq ( NDAQ ) a future dividend aristocrat .
The upbeat coverage of Virtu ( VIRT ) stems from its potential to benefit from "an uncertain and volatile backdrop that can support revenues and upward est revisions," the note said. The stock edged higher by 1.9% in premarket trading.
The EW rating for VIRT diverges from the Quant system rating of Sell and aligns with the average Wall Street analyst rating of Hold.
Take a look at Quant's screener of the highest-rated exchanges .
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Nasdaq cut, Virtu upgraded as Morgan Stanley tilts preference to defensive exchanges