NDAQ Stock Trades Below 50-Day SMA: What Should You Do Now?

Nasdaq NDAQ has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. As of April 4, 2025, its share price was $68.25, down 18.9% from its 52-week high of $84.15.

The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend. 

With a market capitalization of $39.2 billion, Nasdaq is a leading provider of trading, clearing, marketplace technology, regulatory, securities listing, information and public and private company services. Its free cash flow conversion, which has remained more than 100% over the previous few quarters, reflects its solid earnings.

NDAQ has been successful in maximizing opportunities as a technology and analytics provider and growing core marketplace business. Its focus on market technology and information services helps businesses explore vast opportunities that are in line with its developmental strategies.

NDAQ Price Movement vs. 50-Day Moving Average

Nasdaq Shares Drop YTD

Nasdaq has lost 11.7% year to date, underperforming the industry and the sector but outperforming the Zacks S&P 500 composite’s return in the same time frame.

NDAQ vs Industry, Sector & S&P 500 YTD

NDAQ Shares are Relatively Cheap

Nasdaq shares are trading at a discount to the industry. Its price-to-earnings of 20.62X is lower than the industry average of 22.53X.

Shares of other players like Intercontinental Exchange, Inc. ICE, MarketAxess Holdings Inc. MKTX and CME Group CME are also trading at a multiple higher than the industry.

Average Target Price Reflects a Solid Upside

Based on short-term price targets offered by 18 analysts, the Zacks average price target is $90.67 per share. The average indicates a potential 22.8% upside from the last closing price.

Optimistic Growth Projections for NDAQ

The Zacks Consensus Estimate for 2025 earnings is pegged at $3.20 per share, indicating a 13.5% year-over-year increase on 8.3% higher revenues of $5 billion. The consensus estimate for 2026 earnings per share is pegged at $3.62, indicating a 13.3% year-over-year increase on 7.8% higher revenues of $5.4 billion.  The expected long-term earnings growth rate is 12.5%, better than the industry’s 9.7%.

Mixed Analyst Sentiment

The Zacks Consensus Estimate for 2025 earnings has moved 2 cents down while the same for 2026 moved 1 cent north in the last seven days.

NDAQ’s Favorable Return on Capital

Return on equity, which reflects the company’s efficiency in utilizing shareholders' funds, was 14.8% in the trailing 12 months, better than the industry’s average of 13.5%. 
 

Return on invested capital (ROIC) has remained around 10% over the past few years. The company has raised its capital investment significantly, reflecting its efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 6.5%, higher than the industry average of 5%.

NDAQ’s Growth Path

Nasdaq’s growth strategy focuses on generating more revenues from high-growth Market Technology and Investment Intelligence segments, forward R&D spending on higher-growth products, expansion of its Anti-Financial Crime clientele and innovations. 

The company expects strong growth from its index and analytics businesses and moderate growth in its exchange data products across U.S. and Nordic equities. Nasdaq estimates Capital Access Platforms revenue growth of 5-8%, Financial Technology Revenue growth of 10-14% and total Solutions revenue growth of 8-11% over the medium term. The company estimates Solutions Business' medium-term organic revenue growth to be in the range of 8-11%.

Nasdaq has an impressive inorganic story, providing it with direct access to the Canadian equities market, expanding its technology offerings, and enhancing its market surveillance techniques. 

Nasdaq noted that the anti-fin crime space has a total addressable market of $12.5 billion. With Verafin under its portfolio, NDAQ established itself as a reg tech leadership to create a global SaaS leader. Nasdaq aims to achieve 40-50% SaaS revenues as a percentage of total revenues this year.

Nasdaq has been incurring higher expenses that weigh on its net margin.  The company expects non-GAAP operating expense growth to be in the band of 5-8% over the medium term.

NDAQ is estimated to incur $115-$145 million in pretax charges, of which about 40% will be non-cash charges due to a change in the corporate structure. Nasdaq estimates benefits in the form of combined annual run rate operating efficiencies and revenue synergies of at least $30 million by 2025.

How Should You Play NDAQ Stock Now?

Nasdaq is set to grow on impressive organic growth, an increasing on-trading revenue base and strategic buyouts to capitalize on market opportunities. Nasdaq is investing in proprietary data, migrating markets and SaaS solutions to capitalize on the growth opportunities in the cryptocurrency markets.

NDAQ’s dividend story is impressive. It has steadily increased its dividend each year and will continue to do so to achieve a dividend payout ratio of 35-38% by 2027. 

Yet its increasing debt level, unfavorable comparison of its debt-to-equity ratio with the industry average and its lower times interest earned raise concerns. It is thus better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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