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On Friday, Keefe, Bruyette & Woods analyst Kyle Voigt maintained a Market Perform rating and a $225.00 price target for MarketAxess Holdings Inc. (NASDAQ: MKTX). Voigt’s assessment comes amid significant changes in the competitive landscape for the electronic cash credit trading market, which have adversely affected MarketAxess’s position.
MarketAxess, once the dominant electronic platform with over 80% electronic share in 2018, has seen this share drop to less than 50% today. This decline in market share has resulted in the company’s stock price remaining stagnant since the end of 2018, in stark contrast to its exchange peers, which have seen an average increase of 156%. Additionally, MarketAxess’s stock is currently trading approximately 65% below its all-time high from December 2020. Despite these challenges, InvestingPro analysis reveals the company has maintained dividend payments for 17 consecutive years and achieved 8.58% revenue growth in the last twelve months.
The analyst noted that the performance of MarketAxess has been further impacted by weaker-than-expected U.S. market share in January and February. This has sparked growing speculation among investors about the potential for MarketAxess to merge with a larger exchange.
Voigt’s commentary reflects the broader shifts within the industry over the past seven years, highlighting the increased competition that has challenged MarketAxess’s standing as the incumbent electronic platform. The firm’s evaluation indicates that while MarketAxess has faced headwinds, its current market position and performance are reflected in the maintained Market Perform rating and price target.
In other recent news, MarketAxess Holdings Inc. reported a slight earnings per share (EPS) beat, driven by higher revenues, lower expenses, increased interest income, and a lower tax rate. However, Keefe, Bruyette & Woods (KBW) adjusted their outlook by lowering the stock’s price target from $251 to $225, citing challenges like slower industry volumes and a decline in market share. Despite these challenges, KBW maintained a Market Perform rating, indicating no expected significant change in the stock’s performance relative to the broader market. Citi analysts also revised their price target for MarketAxess, reducing it from $325 to $300, while keeping a Buy rating. This adjustment follows a report showing a 14% sequential decrease in total credit average daily volume for December. Analysts at Citi remain optimistic about MarketAxess, suggesting the company needs to demonstrate either increased spreads and volatility or clear market share gains to sustain its momentum. Meanwhile, UBS expressed confidence in MarketAxess as a key player in the transition to electronic trading platforms. UBS also reiterated Intercontinental Exchange (NYSE:ICE) as their preferred choice within the exchange group, highlighting positive energy volume trends and a recalibrated mortgage outlook.
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