NDAQ Stock Near 52-Week High: A Signal for Investors to Hold Tight?

Shares of Nasdaq, Inc. NDAQ closed at $94.71 on Thursday, near its 52-week high of $97.63. This proximity underscores investor confidence. It has the ingredients for further price appreciation. 

The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $88.78 and $85.93, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

NDAQ is an Outperformer

Shares of Nasdaq have gained 21.9% in the past year, outperforming the industry's growth of 8.8%, the Finance sector’s return of 16.4% and the Zacks S&P 500 composite’s appreciation of 15.2%.

NDAQ Shares are Overvalued

Nasdaq shares are trading at a multiple higher than the Zacks Securities and Exchange industry. Its forward price-to-earnings of 25.04X is higher than the industry average of 24.1X.

However, shares of Intercontinental Exchange Inc. ICE, Cboe Global Markets, Inc. CBOE and CME Group Inc. CME are trading at a discount to the industry average.

NDAQ’s Growth Projection Encourages

The Zacks Consensus Estimate for Nasdaq’s 2025 earnings per share indicates a year-over-year increase of 21.2%. The consensus estimate for revenues is pegged at $5.22 billion, implying a year-over-year improvement of 12.2%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 10.8% and 7.2%, respectively, from the corresponding 2025 estimates. 

The long-term earnings growth is expected to be 16.5%, better than the industry average of 11%.

Optimist Analyst Sentiment on NDAQ

Each of the 10 analysts covering the stock has raised estimates for 2025, and eight analysts have raised the same for 2026 over the past 60 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 1.5% and 1.8%, respectively, in the past 60 days.

Average Target Price for ICE Suggests Upside

Based on short-term price targets offered by 16 analysts, the Zacks average price target is $106.50 per share. The average suggests a potential 13.6% upside from the last closing price.

Nasdaq’s Favorable Return on Capital

Return on equity in the trailing 12 months was 16.2%, better than the industry average of 14.8%. This highlights the company’s efficiency in utilizing shareholders’ funds. 

Also, the return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting NDAQ’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 7.3%, better than the industry average of 6.7%.

Key Points to Note for NDAQ

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

Nasdaq remains focused on improving growth via organic means. The company thus expects growth from its index and analytics businesses, followed by moderate growth in its exchange data products across U.S. and Nordic equities.  

Nasdaq continues to expect 2025 revenue growth within the medium-term outlook for both Capital Access Platforms and Financial Technology, with Capital Access Platforms at or slightly above the high end of the range, coming from continuous trends in index growth and slightly better-than-expected performance in data and listings within FinTech.

Nasdaq also expects Financial Crime Management Technology in the range of mid-20s, Regulatory Technology at the High single/low double digits, and with Capital Markets Technology within its range of high single to low double digits. It expects data and listings to grow within the medium-term outlook of low single digits in 2025, and Index revenues to grow above the medium-term outlook of mid-to-high single digits in 2025.

Nasdaq has grown meaningfully over the years through a number of strategic expansions. These acquisitions have helped the company gain direct access to the Canadian equities market, expand its technology offering, and improve its market surveillance techniques. 

Nasdaq boasts a healthy balance sheet and cash position, along with modest operating cash flow from its diverse business model.

Conclusion

Nasdaq is set to grow on impressive organic growth, an increasing on-trading revenue base and strategic buyouts to capitalize on market opportunities. Nasdaq’s focus on Market Technology and Information Services businesses helps explore vast opportunities through its developmental strategies.

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. 

Higher return on capital, favorable growth estimates, and attractive valuations should continue to benefit NDAQ over the long term.
Investors should refrain from buying this Zacks Rank #3 (Hold) stock now, given its premium valuation. Instead, they should wait for a better entry point to optimize returns. 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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