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On Thursday, BofA Securities adjusted its stance on Virtu Financial (NASDAQ:VIRT), shifting from a Buy to a Neutral rating, accompanied by a price target of $43.00. The revision reflects a reassessment of the company’s position amidst ongoing global trade disputes and their impact on the economy. According to InvestingPro data, the company maintains a "GREAT" overall financial health score of 3.15/5, with particularly strong momentum and profitability metrics.
Virtu Financial has experienced notable growth, with a year-to-date (YTD) return of +19.08% and an impressive +81.46% over the past twelve months. This performance has been primarily driven by robust volumes in the company’s Market Making and Execution Services divisions. According to BofA Securities, these segments initially saw a boost from trade conflicts, a trend that has been consistent with other market downturns, such as the one observed in 2022. The company has maintained dividend payments for 11 consecutive years, currently offering a 2.27% yield.
Despite the strong recent performance, BofA Securities cites several reasons for the downgrade. The firm points out that Virtu’s stock has significantly outperformed its peers, which has led to a less attractive valuation, now 30% higher compared to the 2022-23 period. Additionally, there is a concern about the potential for profit deceleration in the second half of 2025. The stock currently trades at a P/E ratio of 12.16, while InvestingPro analysis suggests the stock is trading near its Fair Value.
The analyst’s commentary highlights the flat year-to-date performance of their diversified financials coverage, which stands in contrast to Virtu’s gains. This disparity, along with the elevated recession risk tied to global trade disputes, has prompted the reassessment of Virtu Financial’s stock.
BofA Securities’ new rating of Neutral indicates a shift in expectation for Virtu Financial’s stock performance, suggesting that the firm anticipates a more modest growth trajectory in light of the current economic climate and the company’s recent valuation increase.
In other recent news, Virtu Financial reported strong financial results for the first quarter of 2025, exceeding Wall Street’s expectations. The company posted an earnings per share (EPS) of $1.30, surpassing the projected $1.06, and reported revenue of $837.9 million, which was nearly double the expected $444.36 million. Virtu Financial’s robust performance was attributed to its diversified market-making platform and strong execution services, with adjusted net trading income reaching $497 million. The company also repurchased 1.3 million shares, contributing to a total of $1.4 billion in buybacks to date. In light of these results, Citi analyst Chris Allen raised the price target for Virtu Financial shares to $48, maintaining a Buy rating. Allen highlighted the company’s efficient expense management and positive revenue prospects, noting its expansion into asset classes such as digital assets and fixed income. Virtu Financial’s CEO, Douglas Sifu, emphasized the company’s diversified market-making business and its progress in crypto market-making during the earnings call. The firm is optimistic about benefiting from continued market volume and volatility increases, with future EPS and revenue projections indicating stable growth.
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