by Simon Keane

With shares off sharply since the beginning of the year an Dirk Hoffmann-Becking at Bernstein Research is asking whether bidders may not be tempted to come back for a second attempt at London Stock Exchange.

Justifying his reason to upgrade the stock from under perform to market perform, analyst Hoffmann-Becking says the shares are now correctly reflecting the LSE’s ‘structural and cyclical challenges’. But he also adds that at today’s levels the company is ‘well within reach of Nasdaq or NYSE Euronext.’

Hoffmann-Becking’s comments coincided with a rally in the shares which, at today’s £11.69, are up 14% from their 2008 low of £10.34, hit just before his views were published. The analyst suggests LSE could benefit from ‘significant cost-saving opportunities,’ in particular by reducing staff numbers.

The latest comments come after the exchange reported a 20% drop in trading volumes through its electronic order book between April and May. LSE reports its finals on Thursday, when investors may be looking for guidance on how trading volumes might fare against a backcloth of retreating equity markets.