Bank of America just raised its EUR/USD forecast
On Thursday, BofA Securities adjusted its stance on CBOE Holdings (NYSE:CBOE), downgrading the company's stock rating from Buy to Neutral and reducing the price target from $260.00 to $227.00. The revision comes as BofA Securities anticipates a slowdown in the second half of 2025, which could impact the company's performance. According to InvestingPro data, CBOE's stock has recently experienced significant volatility, with the current price at $209.37, showing a notable 49.92% return over the past year despite recent pressure.
BofA Securities cited several of CBOE Holdings' competitive advantages, such as the tax benefits, cash settlement options, extended trading hours, and the lack of early assignment risk associated with index options. These factors, along with the company's efforts to expand into new client channels, are expected to drive increased trading volumes over time. InvestingPro analysis reveals strong fundamentals, with a healthy gross profit margin of 50.61% and robust return on equity of 18%. The company maintains an impressive Financial Health Score of "GOOD," suggesting operational strength despite market challenges.
Despite these strengths, concerns have arisen regarding the potential for a deceleration in the latter half of 2025. BofA Securities suggests that this slowdown could be particularly influenced by a possible decline in retail investor engagement. As a result, the firm has revised its volume forecast downward, leading to a reduction in their earnings estimates for the second half of 2025, as well as for the years 2026 and 2027.
The new earnings projections are now set at $4.60 for the second half of 2025, with $9.89 and $11.37 for the full years of 2026 and 2027, respectively. These figures are decreased from the previous estimates of $5.07 for the second half of 2025, and $11.16 and $12.99 for the following two years.
The lowered price target of $227 is based on a 20x multiple of the estimated earnings for 2027, which reflects a more cautious outlook on CBOE Holdings' financial future. This valuation adjustment indicates a change in expectations from BofA Securities regarding the company's growth trajectory and market conditions in the coming years. Based on InvestingPro Fair Value analysis, CBOE appears to be trading near its fair value. Investors seeking deeper insights can access comprehensive valuation metrics and 12 additional ProTips through InvestingPro's detailed research reports, available for over 1,400 US stocks.
In other recent news, CME Group has captured attention with Piper Sandler's analyst Patrick Moley raising the stock's price target to $283, maintaining an Overweight rating. Moley cites CME Group's (NASDAQ:CME) broad asset class exposure and institutional focus as key advantages, particularly in times of economic uncertainty. The anticipated increase in trading volumes is attributed to growing demand for risk management among institutions and corporations. Meanwhile, CBOE Holdings has seen significant developments, with Morgan Stanley (NYSE:MS) upgrading its stock rating to Overweight and increasing the price target to $235, reflecting a positive outlook amid market volatility. The firm anticipates revenue and earnings growth in the coming years, driven by strategic product expansion and increased trading volumes.
CBOE is also set to introduce new FTSE Bitcoin Index futures, expanding its suite of bitcoin products to meet the growing demand for crypto exposure. UBS has adjusted CBOE's stock price target to $235, maintaining a Neutral rating while noting an increase in first-quarter revenue forecasts. The rise in index options volumes has contributed to a 12% year-over-year growth in net revenue for the quarter. RBC Capital Markets has highlighted a surge in trading volumes across exchange markets, with CBOE experiencing a notable uptick in activity as the VIX index rose. These developments underscore the dynamic environment in which both CME Group and CBOE are operating, as they navigate macroeconomic uncertainties and evolving market conditions.
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