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Sandler O'Neill Cuts Chicago Mercantile Exchange


Sandler O'Neill cuts the Chicago Mercantile Exchange (CME) to hold.

Analyst Richard Repetto says record February volume of 3.77 million contracts per day were up 1.1% from January and 50.1% year-over-year.

However, he notes management stated it expects a rate per contract (RPC) for the first-quarter 2005 to be slightly below RPC in fourth-quarter 2004 due to a mix of issues.

With the Chicago Mercantile Exchange up some 15% from his Feb. 2 upgrade, he is taking a more conservative stance, downgrading from buy as he believes the valuation properly reflects volume growth and pricing issues.

Repetto raises his $7.85 2005 earnings per share estimate to $7.87 and his $9.60 2006 earnings per share to $9.65. He adjusts his target to $222, or 23 times his 2006 earnings per share estimate.


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