Ahead of the Bell: Nasdaq OMX Group downgraded

An analyst on Wednesday cut his rating on Nasdaq OMX Group Inc. to "Hold" from "Buy," citing its current valuation and a cautious outlook for the broader exchange operator sector.

Deutsche Bank analyst Michael Carrier in a research note said Nasdaq OMX's price-to-earnings valuation gap with competitor NYSE Euronext has narrowed to a fair trading range. That valuation overall remains low, Carrier noted, but he added there are few catalysts that could push the stock price much higher.

Carrier has a price target of $23 for the stock. Shares of Nasdaq OMX Group closed Tuesday at $21.31.

Aside from the shrinking valuation gap between its nearest competitor, Carrier said the overall exchange sector will continue to see challenges in the upcoming quarter. Cash equity volumes are declining from high levels, pricing pressures remain amid strong competition and the options market may face declining volumes as well as more competitors entering the marketplace, Carrier wrote.