ICE changes
Pick any two versions below to diff them.
- Price
- $157.79 → $180.59(+14.4%)
- Discount category
- Well below intrinsic value → Close to intrinsic value
- Next earnings
- Oct 29, 2026 → Feb 4, 2027
- Thesis
- The market still prices ICE partly as a mortgage company. The 2023 Black Knight purchase made mortgage technology about one fifth of net revenue, and that revenue moves with US home-loan volume. Mortgage rates rose again from July 2026. The Freddie Mac 30-year rate went from 6.43% on July 2 to 7.40% on October 8, 2026, and the Federal Reserve raised its target rate in September. Higher rates keep refinance volume low and delay the mortgage recovery that the Black Knight purchase depends on. The pending MarketAxess purchase adds a second question. ICE will pay about $6.0 billion in cash with new debt while it still integrates Black Knight, and investors ask whether it can integrate the deal well and reduce the debt on plan. For the gap to close, three things must be true. Exchange and data revenue must keep growing; these two segments gave about 80% of net revenue in the removed: first half added: third quarter of 2026, and recurring revenue grew removed: 8% added: 7% in removed: the second added: that quarter. Mortgage technology revenue must keep growing with higher rates, as it did in 2024 and 2025. The MarketAxess deal must close in the first removed: half added: quarter of 2027, and gross leverage must fall from about 3.4 times to 3.0 times or less within 18 to 24 months after closing. The removed: first evidence comes added: deal passed two tests in October 2026: the US antitrust waiting period ended early on October removed: 29, 2026, added: 21, and MarketAxess shareholders approved the deal on October 29. The next evidence comes with the removed: third added: fourth quarter removed: report, added: report on February 4, 2027, and with the removed: MarketAxess shareholder vote added: closing and the removed: end of the US antitrust waiting period. added: first leverage report after it. If these checks pass, the gap can close over the next four to six quarters. If mortgage rates stay high for longer or added: other regulators delay the removed: deal has antitrust delays, added: deal, the gap can stay into 2028.
- Risks
- Mortgage technology revenue depends on US mortgage volume, which moves with interest rates that ICE does not control. The Freddie Mac 30-year rate rose from 6.43% in July 2026 to 7.40% in October 2026, which keeps refinance volume low. If rates stay high, the growth of this segment can slow or stop. ICE is still integrating Black Knight, bought in 2023, while it works to close the purchase of MarketAxess for about $6.0 billion in cash. added: MarketAxess shareholders approved the deal on October 29, 2026, and the US antitrust waiting period ended on October 21, 2026. ICE added: now expects the deal to close in the first removed: half added: quarter of 2027, after the removed: shareholder vote and the antitrust and other regulatory approvals. The deal adds about $6 billion of debt, and two integrations at the same time raise execution risk. Exchange trading revenue depends on trading volume and market volatility, which change from quarter to quarter. A calm market with lower volume could reduce this revenue.
- Balance sheet
- Cash: removed: $1.1B added: $936M Debt: removed: $19.8B added: $23.3B Net debt: removed: $18.8B added: $22.4B Interest cover: removed: 7.5× added: 7.1× Undrawn credit line: $2.8B, to August 2031 Ratings: Moody's A3 (stable outlook), S&P A- (stable outlook) Intercontinental Exchange funds itself with unsecured debt of the parent company and with cash from its exchanges, data and mortgage software. At removed: June added: September 30, 2026, the debt was removed: $18.6 added: $22.3 billion of senior notes and removed: $1.2 added: $1.0 billion of commercial paper. The notes had a weighted average maturity of removed: 13 added: 12 years and an average cost of removed: 3.7%. added: 3.9%. The debt includes the $3.75 billion of notes that ICE issued on August 20, 2026 to pay for MarketAxess. Cash is unrestricted cash. Interest cover is GAAP operating income divided by interest expense for the first removed: half added: nine months of 2026. The largest numbers on the balance sheet are removed: $114.6 added: $113.3 billion of cash margin deposits and guaranty funds at its six clearing houses. This money belongs to clearing members and has an equal liability, so it does not fund ICE and is not its cash. removed: To pay about $6.0 billion in cash for MarketAxess, ICE priced $3.75 billion of new notes on August 11, 2026 and issued them on August 20. If the deal does not close by July 29, 2027, or by a later date up to July 29, 2028 while the antitrust review continues, ICE must redeem the 2033 and 2036 notes, $1.4 billion in total, at 101%. removed: On August 20, 2026, ICE also removed: signed added: has a $2.0 billion delayed draw term removed: loan, extended most of its added: loan for the deal, which it had not drawn at September 30, 2026, and a $3.9 billion revolving credit removed: facility added: facility. Of that facility, $3.67 billion runs to added: August 2031, and removed: cancelled its bridge loan commitment. It added: $2.8 billion was free for general use at September 30, 2026. ICE plans to added: draw the term loan and to issue about $0.5 billion more commercial paper at removed: closing. With all added: closing, which ICE now expects in the first quarter of removed: this financing, total debt would have been about $26.0 billion at June 30, 2026. added: 2027. ICE expects gross leverage of 3.4 times adjusted EBITDA at closing and targets 3.0 times or less within 18 to 24 months. removed: It also raised added: Through September 30, 2026, ICE bought back $1.6 billion of its removed: buybacks to $400 added: shares and paid $884 million removed: a quarter, added: of dividends, so debt reduction and buybacks share free cash flow until about 2029. The ratings are the expected ratings of the new notes, dated August 11, 2026. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- Oct 29, 2026: MarketAxess shareholder vote and end of US antitrust review. removed: Pending. added: Passed. Watch: Shareholder approval and no second request or suit from the Department of Justice pass; a failed vote or a longer antitrust review that delays closing fails. added: Outcome: The US antitrust waiting period ended early on October 21, 2026, and MarketAxess shareholders approved the deal on October 29, 2026. Oct 29, 2026: Q3 2026 earnings: mortgage technology and recurring revenue. removed: Pending. added: Passed. Watch: Mortgage technology revenue that still grows from a year earlier with higher mortgage rates, and recurring revenue growth near the 8% of Q2, pass; a fall in mortgage technology revenue from a year earlier fails. removed: Q2 added: Outcome: Mortgage technology revenue grew 4% to $549 million and recurring revenue grew 7%, while net revenue grew 15% on higher trading volume. Feb 4, 2027: Q4 2026 earnings: mortgage technology and 2027 added: outlook. Pending. Watch: Mortgage technology revenue that still grows from a year earlier and recurring revenue growth of 7% or more pass; a fall in mortgage technology revenue from a year earlier fails. Q1 2027 (estimate): MarketAxess deal closing and first leverage report. Pending. Watch: Closing in the first removed: half added: quarter of 2027 after the removed: antitrust and foreign added: other regulatory approvals, with gross leverage near 3.4 times and buybacks still at $400 million a quarter, passes; a delay past mid-2027 or higher leverage than planned fails.
- Recent events
- Oct added: 29, 2026: ICE reported Q3 2026 results. Net revenue was $2.77 billion, up 15% from a year earlier, and adjusted diluted EPS was $2.02, up 18%. Exchange net revenue grew 22% to $1.54 billion because trading volume rose. Recurring revenue grew 7%, and mortgage technology revenue grew 4% to $549 million. ICE now expects the MarketAxess deal to close in the first quarter of 2027, earlier than the first half of 2027 that it gave in July. Oct 29, 2026: MarketAxess shareholders approved the purchase by ICE at a special meeting. About 28.2 million shares voted for the deal and about 34,000 voted against it. Oct 21, 2026: The Department of Justice and the Federal Trade Commission ended the US antitrust waiting period for the MarketAxess purchase early, on October 21, 2026. Other regulatory approvals are still necessary. Oct 5, 2026: ICE reported that its average daily trading volume in Q3 2026 was 31% higher than a year earlier. In September, volume was 51% higher, and open interest in its interest rate futures reached a record. Oct 5, 2026: ICE's October Mortgage Monitor reported that demand for adjustable-rate mortgages reached a nearly four-year high because mortgage rates rose. ICE's 30-year rate index was 7.2% on September 24, 2026. Sep 29, 2026: ICE and MarketAxess withdrew their US antitrust filings on September 25 and filed them again on September 29. This gives the Department of Justice more time. The waiting period now ends on October 29, 2026. Sep 29, 2026: Wells Fargo renewed its agreement to use ICE's MSP mortgage servicing system. It will move its full home loan servicing portfolio onto MSP. The companies did not give the financial terms. Sep 18, 2026: MarketAxess set a special virtual shareholder meeting for October 29, 2026, to vote on its $167-per-share cash acquisition by ICE. Sep 16, 2026: The Federal Reserve raised its target rate by 0.25 percentage points, to a range of 3.75% to 4.00%. This was its first increase since 2023. Mortgage rates continued to rise after the decision. Sep 10, 2026: ICE published its September 2026 Mortgage Monitor. Homeowners who switched home insurance carriers over the prior year saved a record 6.6% on average, while those who stayed with their carrier saw premiums rise 10.4%. Aug 20, 2026: ICE issued $3.75 billion of new notes, due from 2029 to 2036, to pay for MarketAxess. It also signed a $2.0 billion delayed draw term loan and cancelled its $6.2 billion bridge loan commitment. Aug 10, 2026: ICE's own Mortgage Monitor report showed mortgage holder equity reached a record $18 trillion, and annual home price growth reached a 14-month high in July 2026. Jul 30, 2026: ICE reported Q2 2026 results. Net revenue was $2.67 billion, up 5% from a year earlier. Recurring revenue grew 8%, and mortgage technology revenue grew 5% to $557 million. ICE also agreed to buy MarketAxess for $167 per share in cash, an equity value of about $6.0 billion and an enterprise value of about $5.7 billion. ICE raised its share buybacks to $400 million a quarter.