125% rise on day one from initial offering price
The stellar early increase in New York Mercantile Exchange
(Nymex)'s share price following the exchange's recent IPO
brought it into range with other listed exchanges in terms of
earnings ratio. This caused some observers to speculate that
the listing was undervalued by its book runners, leading to the
share price doubling on day one.
Nymex's P/E ratio on 21 November was 72.68, significantly
above Chicago Mercantile Exchange (CME)'s 59.51 but still below
that of rival Intercontinental Exchange (ICE), rated at
ICE and Nymex's high ratings were believed by analysts to
reflect favourable views on the commodities sector, while ICE's
status as a newer, growth business and concerns over threats to
Nymex's major product suites hinted at its lower rating.
Indeed, one market source commented that the threats to
Nymex's business and its ongoing commitment to paying for CME's
Globex electronic trading system made Wall Street's valuation
of the New York exchange "speculative in the extreme".
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