Deutsche Bank upgrades CME Group stock to Buy on prediction markets growth

Investing.com - Deutsche Bank upgraded CME Group (NASDAQ:CME) from Hold to Buy on Thursday, raising its price target to $300.00 from $266.00 following the company’s third-quarter earnings report. The company, currently valued at $96.5 billion, has demonstrated strong financial health with an overall "GOOD" rating according to InvestingPro metrics.

The upgrade reflects Deutsche Bank’s confidence in CME Group’s strategic organic growth initiatives, particularly within prediction markets, which are expected to drive earnings per share growth to at least high single digits next year, following an estimated 9-10% growth this year.

Despite CME shares outperforming peer exchanges and the broader market with a 15% gain year-to-date compared to median exchanges up 9% and the S&P 500 up 14%, the stock’s valuation has decreased from a 30% price-to-earnings premium to the S&P 500 two years ago to approximately market multiple currently.

Deutsche Bank raised its earnings per share estimates by 6-9% across its forecast horizon, citing potential traction from new initiatives discussed during the third-quarter earnings call, particularly within the rapidly evolving prediction markets space.

The new $300 price target represents 12% upside over the next 12 months, with a potential 16% total return including dividends, and Deutsche Bank notes that CME shares have historically performed stronger in the first and fourth quarters, suggesting current levels offer a favorable entry point. The company has maintained dividend payments for 23 consecutive years and currently offers a 4% yield, with dividend growth of 9.6% over the last twelve months. InvestingPro subscribers can access the full financial health analysis, including 8 additional key ProTips and a comprehensive Pro Research Report that provides deep insights into CME Group’s market position and growth potential.

In other recent news, CME Group announced its third-quarter earnings for 2025, reporting a slight beat on earnings per share (EPS) but a miss on revenue forecasts. The company achieved an EPS of $2.68, surpassing the forecast of $2.64. However, revenue came in at $1.5 billion, which was below the anticipated $1.53 billion. These results reflect mixed outcomes for the company, with earnings slightly exceeding expectations while revenue did not meet projections. The earnings report highlights the importance of closely monitoring both EPS and revenue figures for a comprehensive understanding of financial performance. Such mixed results can influence investor sentiment and market reactions. These developments are part of the ongoing financial narrative for CME Group.

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