Unicredit Bank Maintains its HOLD Rating on Deutsche Borse Target Price Reduced

August 18 00:00 2011

London, April 18 (TheAlphaReporter.com) – Analyst Bernd Müller-Gerberding of UniCredit Bank reiterates his HOLD rating on Deutsche Borse (LSE: DB1Gn.DE). The target price has been reduced from €60 to €47.
In a research note published this morning, the analyst mentions that France and Germany have agreed to pursue transaction tax on stock exchange transactions. Exchange stocks fell substantially yesterday following the news. The analysts say they would not be too optimistic about the earnings potential of Deutsche Borse in the median term due to the panic in the financial markets recently. A panic is often followed by low trading volumes. Even before yesterday, Deutsche Borse underperformed. UniCredit Bank, however, says that yesterday’s reaction on Deutsche Borse may be an overreaction, and it offers a trading opportunity.
According to UniCredit Bank, trading volumes this month are growing at three-digit percentage, which is good for short term assumptions. The analysts however believe that this could be a bear trap as the market might assume that volumes will fall over the medium term. UniCredit Bank adds that the idea of Tobin-style transaction tax on financial transactions in Germany or the entire world is not a good idea.

Investment Highlights of Deutsche Borse

• Potentially significant volume losses upon tax
• Strong volumes
• Fears of mid-term volume ebb

Stock Triggers

• Regulatory approval/concession for NYSE merger
• Details of transaction tax
• Volume and rate trends

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