Oppenheimer’s Favorite Stocks For Next 12 Months: Top 32 Stock Picks

28. Nasdaq, Inc. (NASDAQ:NDAQ)

Share Price Upside: -1%

Number of Hedge Fund Investors In Q2 2024: 37

Average Analyst Share Price Target: $69.86

Nasdaq, Inc. (NASDAQ:NDAQ) is the firm behind the NASDAQ exchange, the biggest technology focused stock exchange in the world and the second largest in terms of market capitalization. This provides it with the best moat possible in its industry, but simultaneously, it also makes Nasdaq, Inc. (NASDAQ:NDAQ) vulnerable to a lack of diversification which can make it suffer in the off chance of a paradigm shift in the financial market. However, the firm is aware of this, and its efforts at diversification have yielded benefits over the course of the past few years. As of Q2 2024, roughly 78% of Nasdaq, Inc. (NASDAQ:NDAQ)’s revenue of $1.1 billion came from the firm’s non exchange business which includes software products to help fight money laundering and manage risk. The SaaS nature of its non exchange products also opens up the opportunity for recurring revenue for the firm, and it can benefit from an improved outlook of its exchange business in a lower interest rate environment because of more listings on the NASDAQ exchange and higher business SaaS spending. Oppenheimer agrees with us as it comments that the recovery “of IPO and strength in equities markets can support listing and index businesses and help accelerate organic growth.”

Oakmark Funds mentioned Nasdaq, Inc. (NASDAQ:NDAQ) in its Q2 2024 investor letter. Here is what the fund said:

“Nasdaq is a global technology company that pro- vides platforms and services for capital markets and other industries. Over the past decade, under the leadership of CEO Adena Friedman, Nasdaq has transformed from a traditional equity exchange into a collection of fast-growing, high-quality software and data businesses with the majority of revenue coming from non-exchange segments. Nasdaq’s recent acquisition of Adenza led some investors to question management’s capital allocation disci- pline. However, we believe the subsequent share price reaction more than compensates for the risk that Nasdaq overpaid for Adenza. More importantly, the experience seems to have catalyzed a renewed focus on organic growth, debt pay- down, and capital return. Despite Nasdaq’s potential for faster than average growth, high mix of recurring revenue, and impressive operating margins, the stock trades at a P/E multiple in line with the broader market. We were pleased to purchase shares in this excellent business for an average price.”