Tuesday, Citi reaffirmed its Buy rating on shares of Virtu Financial (NASDAQ:VIRT), maintaining a price target of $32.00. The firm's analysis followed the release of trading data for July, which indicated an increase in quoted spread per day compared to the second quarter of 2024 and a rise from June figures. This uptick aligns with the heightened average realized volatility, which climbed to 14.2 in July from 6.9 in June.
The data for August suggests even stronger performance due to a significant rise in volatility earlier in the month. Despite a relative moderation in the latter half of August, volatility levels have remained higher than most of the year's earlier months. Citi predicts a daily market-making net trading income (NTI) of $4.19 for the third quarter of 2024, a decrease of 8% from the $4.53 reported in the second quarter, which the firm considers a conservative estimate.
Virtu Financial's ongoing model enhancements and increased internalization into the third quarter are expected to contribute to the company's performance. Citi's current third-quarter earnings per share (EPS) estimate for Virtu Financial stands at $0.73, with the recent trading data suggesting a potential upside to this forecast. The firm's outlook is based on discussions with the company and an analysis of the trading environment's impact on Virtu Financial's operations.
In other recent news, Virtu Financial has been the subject of attention due to its robust financial performance and promising future outlook. The company reported strong second-quarter results, with an adjusted earnings per share (EPS) of $0.83 and an adjusted net trading income of $385 million. Growth initiatives generated $670,000 per day in adjusted net trading income, which accounted for 11% of the total.
Citi analysts have reiterated their Buy rating on Virtu Financial, citing the company's improved operating model and the potential for earnings to surpass estimates. The firm's positive stance is further bolstered by Virtu Financial's capacity to navigate and capitalize on the evolving trading landscape, including growth opportunities in options, fixed income currencies, commodities, ETF blocks, and cryptocurrency.
Virtu Financial's recent developments also include an expansion into the crypto market-making business and successful capital management strategies, such as share repurchases and debt refinancing. The company's strong cash flow allowed for these strategic moves, while maintaining a commitment to a $0.24 per quarter dividend. With these recent developments, investors are keenly watching Virtu Financial's forthcoming performance data and future growth trajectory.
InvestingPro Insights
As Citi maintains its positive outlook on Virtu Financial (NASDAQ:VIRT), InvestingPro data and tips provide additional context for investors considering the firm's stock. The company's market capitalization stands at approximately $4.8 billion, reflecting its substantial presence in the financial sector.
Notably, Virtu Financial's P/E ratio is currently at 15.47, indicating a reasonable valuation relative to its earnings. Even more compelling is the adjusted P/E ratio for the last twelve months as of Q2 2024, which is 14.53, suggesting a potentially attractive entry point for investors when paired with the company's near-term earnings growth.
Two InvestingPro Tips highlight key aspects for investors: Virtu Financial is expected to see net income growth this year, and analysts have revised their earnings upwards for the upcoming period—both positive indicators for the company's financial health. Furthermore, the firm has consistently maintained dividend payments for 10 consecutive years, which may appeal to income-focused investors. For those interested in a deeper dive, there are 9 additional InvestingPro Tips available on the platform that could further inform investment decisions.
The recent performance metrics are also encouraging, with a 5.89% revenue growth over the last twelve months as of Q2 2024 and a robust gross profit margin of 53.11%. With the stock trading near its 52-week high and a strong return of 70.04% over the past year, these figures underscore the company's momentum and resilience in a volatile market.
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