NYSE Group earnings estimates for 2007 and 2008 are being raised ahead of the merger with Euronext, expected to close in early April, according to a note to clients from analyst Niamh Alexander at CIBC World Markets. For 2007, Ms. Alexander is raising her earnings forecast to $2.76 from $2.41, and for 2008 to $3.56 from $2.81.
The new forecast assumes that the NYSE Euronext group "achieves approximately 25% of the targeted $275 million in cost synergies in 2007 and 75% by 2008, with full realization by 2009 as targeted," according to the note. The earnings projection could be revised still higher "if NYSE retains a greater share of its NYSE-listed trading volume than we currently estimate" or "if the futures derivative business, Euronext Liffe, is more successful in rolling out new products to the U.S. than we currently estimate."
The lockup period — when NYSE shareholders are not allowed to sell shares — ends March 7 for 16% of the outstanding shares, Ms. Alexander noted.
Ms. Alexander saw the possibility that after the Euronext merger, "the NYSE could ease some transfer restrictions."