Intercontinental Exchange Inc. ICE has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. As of Jan. 6, 2025, its share price was $146.58, down 12.7% from its 52-week high of $167.99

The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend. 

With a market capitalization of $84.2 billion, Intercontinental is the second-largest global fixed-income provider. Its more than 5,000 indices represent over $1 trillion in benchmark assets under management.

ICE Price Movement vs. 50-Day Moving Average

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ICE Underperforms in the Past 3 Months

Shares of Intercontinental Exchange have lost 8.7% in the past three months, underperforming its industry’s increase of 0.4%, the sector’s rise of 3.6% and the Zacks S&P 500 composite’s gain of 5.1% in the same time frame.

ICE Vs. Industry, Sector and S&P 500 in 3-Months

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Based on short-term price targets offered by 16 analysts, the Zacks average price target is $184.94 per share. The average suggests a potential 23.42% upside from Monday’s closing price.

Optimistic Growth Projection for ICE

The Zacks Consensus Estimate for 2025 earnings of $6.75 indicates a year-over-year improvement of 11.1% on 6.1% higher revenues of about $10 billion. The expected long-term earnings growth rate is pegged at 10%, better than the industry average of 8.5%.

What’s Favoring ICE?

ICE’s top line is poised to improve on strength in global data services and index business, growth in pricing and reference data business, and strength in ICE Global Network offering, solid desktop, feeds and derivatives analytics. The company has been achieving expense synergies from strategic acquisitions, which have also strengthened its portfolio and expanded its presence. 

ICE boasts the largest mortgage network across the United States and thus remains well poised to benefit from accelerated digitization in the residential mortgage industry. 

ICE continuously engages in strategic investments supported by a healthy and minimal risk-based balance sheet, which also offers stability and buoyancy over the medium to long term.

However, operating expenses have been increasing over the last several years, weighing on margin expansion. With continuous growth initiatives like product launches and technology upgrades, we believe that expenses are likely to remain elevated in the near term. 

Though the debt balance declined, its leverage as well as times interest earned compares unfavorably with the industry average.

ICE’s Return on Capital

Its return on invested capital (ROIC) has increased every year. This reflects ICE’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 6.2%, higher than the industry average of 5%.

Return on equity (ROE) reflects efficiency in utilizing shareholders’ funds. However, ICE's trailing 12-month ROE was 12.8%, which compared unfavorably with the industry average of 13.3%.

ICE Shares are Cheap

ICE shares are trading at a discount to the Zacks Securities and Exchange industry. Its forward price-to-earnings of 21.67X is lower than the industry average of 22.4X. 

The stock remains attractively valued compared with MarketAxess Holdings Inc. MKTX but not so when compared with Nasdaq Inc. NDAQ and CME Group CME.

Parting Thoughts on ICE

ICE is poised for growth banking on the strength of its compelling portfolio and expansive risk-management services, which also ensure revenue flow, as well as strategic buyouts, solid balance sheet and effective capital deployment. Its dividend history is impressive. It has more than doubled its dividends in the last six years.

Given unfavorable ROE, margin pressure and price underperformance, it is better to wait for some more time before deciding to buy this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Intercontinental Exchange Inc. (ICE) : Free Stock Analysis Report

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