EUR/USD likely to find a peak near 1.25: UBS
On Wednesday, Morgan Stanley (NYSE:MS) downgraded CBOE Holdings (NYSE:CBOE), a prominent operator of the U.S. stock exchange, from an Overweight to an Underweight rating, significantly reducing the price target to $215 from the previous $256. The adjustment comes as a reaction to a combination of geopolitical and economic shifts, including a reduction in tariffs with China and a potential for a more favorable macroeconomic trajectory than previously anticipated. According to InvestingPro analysis, CBOE is currently trading above its Fair Value, with a strong financial health score of GOOD.
The downgrade reflects concerns over the potential impact of declining volatility, as measured by the Volatility Index (VIX), which could lead to reduced volumes in index options traded on CBOE’s derivatives exchange. The analyst from Morgan Stanley believes that the combination of these factors could constrain the growth prospects and valuation of CBOE Holdings. However, InvestingPro data shows the company maintains strong fundamentals with a current ratio of 1.6 and sufficient cash flows to cover interest payments.
CBOE Holdings’ stock has been outperforming year to date, with a 13% increase, but it currently trades at a premium compared to recent years. The new price target of $215 implies a 3% downside from the current level, according to Morgan Stanley’s analysis. The firm also adjusted its earnings per share (EPS) estimates for CBOE downwards by 1%. Notably, InvestingPro data reveals that CBOE has maintained dividend payments for 16 consecutive years, with 16 analysts recently revising their earnings estimates upward. For deeper insights into CBOE’s valuation and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In their assessment, Morgan Stanley outlined potential scenarios for CBOE’s stock performance. In a bullish case, the stock could see a 38% upside, whereas the bearish scenario suggests a 41% downside risk. This reevaluation by Morgan Stanley serves as a cautionary signal for investors regarding the anticipated performance of CBOE Holdings in the near future.
In other recent news, Cboe Global Markets reported first-quarter 2025 earnings that exceeded expectations, with adjusted earnings per share reaching $2.50, surpassing the forecasted $2.24. The company’s net revenue increased by 13% year-over-year to $565 million, driven by growth across various business segments. UBS analyst Alex Kramm raised the price target for Cboe to $245 from $235, maintaining a neutral rating, following the company’s strong first-quarter performance. Kramm highlighted Cboe’s potential for growth in retail and overseas markets, noting that near-term stock movement may be influenced by volume trends. Additionally, Cboe has launched innovative products, including Bitcoin index futures, and has increased its full-year organic net revenue growth guidance to mid-to-high single digits. The company also announced the appointment of Craig Donohue as the new CEO, which has generated interest in potential strategic shifts. Despite these developments, UBS maintains a cautious stance on Cboe’s stock compared to other investment opportunities.
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