Blackmont Capital sees good things for TMX Group

I think the message can be this: whether it be good times or bad times, stocks still have to trade. Which seems to bode good things for the TMX Group (TMX:TSX) according to a research report from the Equity Analysts at Blackmont Capital:

“Analysis & Forecasts: So far June has been a strong month almost across the board for TMX. Based on our analysis, using the growth rates seen in TMX’s revenue drivers thus far in Q2/09 (ending June 30th), cash EPS could wind up in the $0.72 range, which is at least 16% above current $0.62 consensus expectations as well as Q1/09 results. We expect significant revisions (including our own) in the coming weeks when the full data is released. Specifically, quarterly cash equity trading volumes are up 17% sequentially despite losing 1.9% in market share to Alpha in June. IPOs are set to rise over 250%, while secondary/supplementary equity financings are up more than 15% from Q1/09. Montreal Exchange’s 3 key
derivatives products are set to see quarterly growth of 10% (30% Q/Q for its most important derivative product, BAX).

Valuation & Recommendation: We view this strong quarter as illustrating the earnings potential of TMX under a market recovery and its ability to grow even in the face of increased competition. TMX shares have significant upside in our view, trading on a consensus forward earnings basis at a 3% discount to the banks and a 26% discount to the asset managers; thus, we maintain our Outperform rating and $41.00 target price.

Not matter what the price of gas, the folks who own the pipeline always seem to make a profit.

MRM