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Athens Exchange | Navigating the dual catalyst: M&A optionality meets cyclical recovery

Athex rerated YTD, but still room to go – Following a sluggish 2024 (-15%), ATHEX shares have rallied c60% in 2025, fuelled by: i) rising trading intensity (ADV >40% y/y at c€200mn ytd), ii) firming conviction in Greece’s DM reclassification (FTSE & Stoxx reviews in sight), and iii) an M&A premium after Euronext confirmed discussions for a potential tender offer. Although the shares have re-rated meaningfully (i.e c20%) following the Euronext news, we believe there is further upside as: (i) EXAE still trades at c30% discount to peers despite a stronger growth outlook, underpinned by operating leverage; and (ii) the M&A angle unfolds, with potential for an improved offer, in our view.

DM upgrade tailwind gathering pace – While MSCI has deferred its decision for now, other key reviews remain live, namely by FTSE (October 2025), S&P (H2 2025), and Stoxx (April 2026) reviews, with Greece already on a watchlist for u/g to developed by those providers. Greece narrowly missed MSCI’s “persistency rule” for DM watchlist inclusion by just one quarter in the size/liquidity test. However, an ongoing consultation could exempt integrated EU markets such as Greece, potentially removing this structural hurdle. In any case, the DM transition looks a 2025-27 event (with MSCI likely to be the last provider to migrate Greece to developed), yet the signaling effect is already compressing risk premia and improving liquidity. With MCap-to-GDP and trading velocity still lagging EU norms, further convergence looks likely, underpinned by macro stability, rising free float, and renewed IPO activity.

EPS revisions meet operating leverage – Following a stronger-than-expected Q1 and rising ADV, we have lifted our 2025–26e EPS by 9–10% as operating leverage kicks in driving an expansion of EBITDA margins above 50% by 2026e. While margins at similar ADV levels remain slightly below prior peaks due to structural cost inflation, EBITDA is still set to grow at c20% CAGR (2024–27e), filtering through to 21% EPS CAGR and a dividend yield of 5-7%, supported by €1.58/share in net cash by end-2027e.

Euronext’s bold pitch; but short of fair value – Euronext’s (ENX) offer (21:1 exchange ratio, €6.90/share implied at the time of announcement) offered a c14% premium to the undisturbed price, with the shares rapidly repricing above this level. While the valuation implied by the offer, 10x EV/EBITDA, is broadly in line with ATHEX’s historic average, it is well below Euronext’s >14x M&A track record. In our view, the bid does not fully reflect ATHEX’s LT earnings power, with the meaningful cost synergies (c€7–8mn, >€1.3 PV per share) effectively accruing entirely to ENX shareholders.

Reinstate at Buy, PT set at €8.20 – Factoring in the recent step-up in ADV and including a M&A-related overlay, we reinstate our TP at €8.20. Our core fundamental DCF-based valuation (at 7.5% WACC) stands at €7.60/share, implying 2025e EV/EBITDA of 11.4x and a P/E of