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On Tuesday, MarketAxess Holdings Inc. (NASDAQ: MKTX) experienced an increase in its price target, which was raised to $292.00 from the previous $202.00 by a Jefferies analyst.
The analyst maintained a Hold rating on the stock. The adjustment follows MarketAxess's third-quarter earnings per share (EPS) for 2024, which showed a 22% increase, rising by $0.33 to reach $1.85, surpassing the consensus estimate of $1.72.
The report highlighted that MarketAxess's high-grade average daily volume (ADV) for the third quarter reached $7.0 billion, which notably exceeded the previous estimate of $5.8 billion. On the other hand, the high-yield ADV was slightly below expectations at $1.3 billion compared to the earlier estimate of $1.5 billion. Additionally, other asset classes, including rates, also surpassed previous estimates, with rates achieving $26.4 billion against the prior $19.6 billion.
The firm's third-quarter 2024 credit fee per million (FPM) was revised upward by 1% to $149, which included an August result of $154. However, the analyst revised down the rates FPM estimate by 8% to $4.15. Consequently, the estimated transaction revenue for MarketAxess was increased by $17 million to $147 million, compared to the previous estimate.
The third-quarter expense estimate for MarketAxess remained consistent with the previous forecast at $120 million. This contributes to a full-year 2024 expense estimate of $478 million, which is in line with the company's guidance of tracking to the low end of the $480-500 million range.
In other recent news, MarketAxess Holdings Inc. reported a 10% increase in total revenue for the second quarter of 2024, reaching $198 million. This rise was attributed to robust commission revenue and the successful integration of recently acquired company, Pragma. The firm's diluted earnings per share hit $1.72, and a new share repurchase program valued at $200 million was launched. However, the company anticipates an additional $10 million in expenses in the second half of the year, primarily for marketing, travel, and technology.
Citi has maintained a positive outlook on MarketAxess, raising its price target from $310.00 to $325.00, while keeping the Buy rating unchanged. The firm's confidence in MarketAxess is further bolstered by the company's continued innovation, particularly through enhancements to trading protocols and the introduction of new workflow tools.
MarketAxess and BlackRock (NYSE:BLK) have also enhanced their partnership, integrating select MarketAxess credit trading protocols, pricing, and data into BlackRock's Aladdin order execution management system. This enhancement is an extension of the collaboration that began in 2013, focusing on Open Trading and analytics.
InvestingPro Insights
MarketAxess Holdings Inc. (NASDAQ: MKTX) continues to demonstrate strong financial performance, as reflected in both the analyst's report and recent InvestingPro data. The company's market capitalization stands at $10.33 billion, underscoring its significant presence in the financial technology sector.
InvestingPro data reveals that MarketAxess has maintained an impressive revenue growth of 6.07% over the last twelve months, with quarterly revenue growth reaching 9.91% in Q2 2024. This aligns with the analyst's observations of increased average daily volumes across various asset classes, particularly in high-grade and rates segments.
The company's profitability remains robust, with a gross profit margin of 62.5% and an operating income margin of 40.87% for the last twelve months. These figures support the analyst's positive outlook on MarketAxess's earnings performance.
InvestingPro Tips highlight that MarketAxess has raised its dividend for 10 consecutive years, reflecting the company's commitment to shareholder returns. This is particularly noteworthy given the current dividend yield of 1.08% and a dividend growth rate of 2.78% over the last twelve months.
It's worth noting that while the stock has shown a strong return of 34.36% over the last three months, an InvestingPro Tip suggests that the RSI indicates the stock may be in overbought territory. This could be valuable information for investors considering the recent price target increase.
For those interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for MarketAxess, providing a deeper insight into the company's financial health and market position.
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