CLOSING Euronext, ABS +18%, valuation gap now narrowed
*Looking at the valuation the stock is now trading quite close to its fair value as the valuation gap has narrowed significantly since we put on the trade
*We are still bullish on the sector as we continue to expect an inflationary environment and longer term we see Euronext as a structural winner to further boost the stock price.
*For now however we are booking our +18% and moving on as we are scanning the universe for fresh candidates.
BUY Euronext, J-curve timing and valuation upside just right for a +15% pop
Tuesday • 04 May 2021 • 17:51
*With the company now closing the rights issue to fund the Borsa Italiana transaction we see the cards lining up for a decent jump
*Borsa Italiana acquisition accretive immediately – and now the company is well positioned for further M&A and leaving potential further upside to any valuation as they are set to become a structural winner
*Rights currently trading 70bps through terms as arbs are buying up rights to get access to the allocation of the rights not taken up – short interest is therefore huge the ENX ords with 90 days of vol shorted
*The company had strong 1Q earnings as well which seems to have gotten lost in all the focus around the rights issue
*Timing just right now from a rights issue pop type of trade as well, normally we start to see the selling pressure subsiding around now which should position the stock for a nice pop over the next – rights stop trading on 6th May
*Valuation looking see the stock trading at a 15% discount to our DCF valuation and a 25% discount to its peers