ASX (ASX:ASX) Valuation in Focus as Cboe Wins Approval to Challenge Exchange Monopoly

The Australian Securities Exchange (ASX:ASX) has entered a new era after the Australian Securities and Investments Commission approved Cboe Global Markets as a rival listing exchange. This move officially ends ASX's exclusive grip on IPOs and primary market listings.

See our latest analysis for ASX.

ASX shares dropped 1.4% following the news of incoming competition from Cboe Australia, highlighting investor concerns about the implications for the exchange’s long-term revenue model. While the 1-year total shareholder return sits at -8%, short-term momentum has faded. An 18% slide in the past three months suggests the market is reassessing growth prospects amid regulatory change and an evolving landscape for capital markets.

If this shift in Australia's listings scene has you thinking bigger, now's an ideal time to broaden your search and discover fast growing stocks with high insider ownership

With the ASX share price down and trading around a 13% discount to analyst price targets, the key question is whether today's weakness unlocks value or if the market is already pricing in slower growth ahead.

Most Popular Narrative: 12.7% Undervalued

With ASX shares closing at A$58.06 and the most-followed narrative suggesting fair value lands much higher, the gap points to intriguing assumptions powering analyst targets and future outlook. Get a glimpse of what could send the share price higher in this direct quote.

Expansion and demand in high-margin technology and data offerings, driven by appetite for analytics, connectivity, and market information from both domestic and global market participants, provides opportunity for recurring, diversified non-transactional income, supporting overall margin expansion and earnings stability.

Read the complete narrative.

How does a traditional market operator command a premium valuation, even with regulatory and competitive headwinds? There is a bold operating transformation at the heart of this narrative, one you’ll want to unpack. The most closely-watched numbers behind this valuation might surprise even ASX veterans. Find out which foundational shifts underpin the optimism around future growth, margins, and strategic pricing power.

Result: Fair Value of $66.51 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising technology costs and tighter regulatory scrutiny could quickly emerge as catalysts that challenge these bullish assumptions and threaten future margin stability.

Find out about the key risks to this ASX narrative.

Another Perspective: Mind the DCF Gap

Taking a different approach, the SWS DCF model suggests ASX shares are trading above their estimated fair value of A$45.45. This method paints a less optimistic picture compared to analyst price targets and raises the real question: are growth assumptions too high, or could the market be discounting hidden risks?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out ASX for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own ASX Narrative

If these scenarios do not align with your outlook, or you want to back your own convictions, it's easy to build your own take in just a few minutes, so why not Do it your way

A great starting point for your ASX research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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