MarketAxess stock price target cut to $225 by KBW

On Friday, Keefe, Bruyette & Woods (KBW) adjusted their outlook on MarketAxess (NASDAQ: MKTX), reducing the price target from $251.00 to $225.00, while continuing to hold a Market Perform rating for the stock. The revision follows MarketAxess’s recent financial performance, which included a slight earnings per share (EPS) beat, attributed to a combination of higher revenues, lower expenses, increased interest income, and a lower tax rate. These factors were somewhat balanced by an uptick in nonoperating expenses and a rise in share count.

The EPS beat was quantified at $0.05 above KBW and consensus estimates. This was broken down into $0.01 from revenue growth, $0.04 from decreased expenses, $0.01 from heightened interest income, and $0.02 from tax benefits, which were partially negated by a $0.02 increase in nonoperating expenses and a $0.01 impact from an expanded share count. The reported operating income surpassed KBW’s estimate by $0.05. Recent data from InvestingPro shows the company achieved 8.58% revenue growth in the last twelve months, with a robust gross profit margin of 62.3%.

KBW has revised their estimates downward for MarketAxess, projecting a 5% decrease in 2025 and a 3% decrease in 2026. The lowered expectations are due to a combination of factors including slower industry volumes, a decline in market share, and reduced fixed income trading protocol (FPM) in January. Despite these setbacks, KBW anticipates a modest recovery in FPM moving forward.

The reduction in the 12-month price target to $225 from $251 reflects these adjusted expectations and the challenges faced by MarketAxess in the current quarter. The Market Perform rating remains unchanged, indicating that KBW does not foresee significant outperformance or underperformance of the stock relative to the broader market in the near future. Despite current challenges, InvestingPro data reveals the company’s strong dividend history, having raised dividends for 11 consecutive years, with a current yield of 1.47%. InvestingPro’s Fair Value analysis suggests the stock may be undervalued at current levels, with 12 additional exclusive insights available to subscribers.

In other recent news, MarketAxess Holdings Inc. has been under the spotlight following a series of developments. The company’s Q3 2024 results showed a robust 20% increase in revenue and a 30% rise in diluted earnings per share, positioning the firm favorably in the market. However, the company’s November trading data, which showed a 3% sequential decline from October levels, led to a 6% drop in share price.

Citi analysts have revised the price target for MarketAxess to $300 from the previous $325, maintaining a Buy rating. Despite December’s results aligning with projections, concerns about negative earnings per share (EPS) revisions are putting pressure on the company’s stock performance. Redburn Atlantic analysts described the November data as disappointing due to a decline in U.S. high-grade and high-yield average daily volume (ADV), despite record gains in emerging markets and municipal bond ADV.

MarketAxess CEO Chris Concannon has highlighted strategic initiatives aimed at growing market share in U.S. credit over the coming quarters. As 2025 approaches, analysts anticipate significant issuance activity which could challenge the company’s market share in the near term. These recent developments underscore the dynamic nature of MarketAxess’s performance and future prospects.

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