IntercontinentalExchange, Inc. (NYSE:ICE) moved up $2.59, or 2%, to $131.78 today after conflicting analyst reports put pressure on the stock. The ordeal began when Wachovia downgraded ICE from "outperform" to "market perform", citing a stock priced with high expectations which could disappoint and lead the stock down in the near term. However the firm also raised their 2007 and 2008 estimates to $3.37 and $4.50 per share, accounting for full accretion of the NYBOT deal and far more robust oil futures trading. All in all, Wachovia believes the shares should trade between $135 and $140, or 29-30x 2008 earnings estimate. Meanwhile, Goldman Sachs retains a more optimistic outlook saying that the market continues to underestimate the growth potential of the exchanges volumes. The firm set their new 2008 earnings estimates at $5.50, which is 43% above consensus and 10% above the next highest estimate. Moreover, GS believes that the risk reward trade-off remains favorable on ICE, with a 2:1 ratio of upside to downside based on bull case 2008 EPS of $7.00 and bear case EPS of $3.85. Consequently, the firm said that it believes the shares should trade around $165, or 30x its 2008 estimates.

Both of these analysts make good point: Oil contract volume has been on the increase during the past few weeks as hedge funds have embraced short trades after OPEC failed to react to a $50/barrel price point. This, combined with strong existing futures volumes, should help ICE's EPS significantly. However, many are quick to note that there also may be some downside pressure on Friday after trading restrictions are lifted for NYBOT insiders. Whether or not the stock will reach $160 remains to be seen; however, this is definitely a stock worth watching over the next few months.

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