Sector Snap: New ratings on brokerages, exchanges

posted: 78 DAYS 16 HOURS AGO

Text SizeAAA

NEW YORK -Goldman Sachs analyst Daniel Harris changed the ratings on a slew of brokerages and stock exchanges Monday, citing improvements in mergers and acquisitions and a possible slowdown in fixed income.

In a note to investors, Harris upgraded stock exchange Nasdaq OMX Group Inc. to "buy" from "neutral," saying the stock's current price doesn't reflect growth potential and likely debt repayments.

Meanwhile, he upgraded electronic fixed-income brokerage MarketAxess Holdings Inc. to "neutral" from "sell" as it increases market share, but downgraded electronic broker Knight Capital Group Inc. to "neutral" from "buy." Knight's new initiatives in fixed income and options markets may take some time to grow revenue, he said, and earnings may not recover until after January 2010.

Harris also upgraded Evercore Partners Inc. to "buy" from "neutral on the investment bank's opportunity to take advantage of an upswing in mergers and acquisitions — activity in November was on pace to reach more than $400 billion, the best month in more than two years, he said. Evercore's appointment to Berkshire Hathaway's Burlington Northern deal was also a big plus.

He reiterated his "conviction buy" on investment boutique Lazard Ltd.

Lastly, Harris downgraded investment bank Jefferies Group Inc. to "sell" from "neutral," saying he expects slowing revenue from fixed income in the fourth quarter, to which Jefferies has a lot of exposure.

Shares of Nasdaq rose 39 cents, or 2.1 percent, to $19.36; MarketAxess was up 44 cents, or 3.5 percent, to $13.08; Evercore gained $1.27, or 4 percent, to $32.64; Knight Capital fell 44 cents, or 2.8 percent, to $15.08; Jefferies dropped $1.57, or 5.9 percent, to $25; and Lazard rose 44 cents, or 1.1 percent, to $39.25.

2009-11-23 14:50:07