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Valued at a market cap of $9.8 billion, MarketAxess Holdings Inc. (MKTX) operates an electronic trading platform for institutional investors and broker-dealer companies. The New York-based company offers institutional investors access to global liquidity in products like U.S. high-grade corporate bonds, emerging markets and high-yield bonds, European bonds, U.S. agency bonds, credit derivatives, and other fixed-income securities.
Shares of this financial company have lagged behind the broader market over the past 52 weeks. MKTX has gained nearly 13.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 31.8%. Moreover, on a YTD basis, the stock is down 10.6%, compared to SPX’s 25.8% gains.
Zooming in further, MKTX’s underperformance looks even more pronounced when compared to the Financial Select Sector SPDR Fund’s (XLF) 45.4% gain over the past 52 weeks and 36.3% return on a YTD basis.
On Nov. 6, shares of MKTX fell 1.5% after its Q3 earnings release. The company’s revenue increased 20% year-over-year to $206.7 million and surpassed the Wall Street estimates of $205.5 million, while its EPS of $1.90 climbed 30.1% from a year ago and exceeded the consensus estimates of $1.82. The strong results were primarily driven by robust growth in U.S. high-grade, emerging markets and Eurobonds commission revenues coupled with a strong increase in service revenues. Moreover, the company also delivered a record portfolio trading average daily volume of $1.1 billion.
For the current fiscal year, ending in December, analysts expect MKTX’s EPS to increase 7% year over year to $7.37. The company’s earnings surprise history is promising. It surpassed the consensus estimates in each of the last four quarters.
Among the 14 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on four “Strong Buy,” nine “Hold,” and one “Moderate Sell” rating.
On Nov. 7, UBS maintained a “Buy” rating on MKTX and raised its price target to $335, the Street-high price target, which indicates a notable 28% upside potential from the current levels.
The mean price target of $278.75 represents a modest 6.5% upside from MKTX’s current price levels.
