Tuesday, Jefferies adjusted its outlook on MarketAxess Holdings Inc. (NASDAQ: MKTX), reducing the price target to $202 from the previous $225, while maintaining a Hold rating on the stock. The revision follows the release of second-quarter earnings per share (EPS) which decreased by $0.17 to $1.68.
The firm noted that both High Grade (HG) and High Yield (HY) Credit Average Daily Volume (ADV) fell short of previous estimates, with HG ADV at $6.4 billion compared to the earlier $6.8 billion forecast, and HY Credit ADV at $1.3 billion, down from the prior $1.4 billion estimate. However, Rates ADV exceeded expectations, reaching $20 billion against the $18 billion previously projected.
A significant factor in the revised estimates was the Fixed Price Model (FPM), which saw total credit decline by 3% to $148 million from $153 million. The transaction revenues were reported at $138 million, a decrease of $9 million compared to previous estimates. This drop in Credit volume and FPM was significant enough to overshadow a slight improvement in Rates FPM, which was $4.50, up from the $4.40 previously estimated.
Furthermore, the second-quarter expense estimate was set at $118 million, down from the prior $120 million, contributing to a full-year estimate of $477 million, which is below the $490 million guidance midpoint previously provided. The revised figures reflect the latest performance and market conditions affecting MarketAxess.
In other recent news, MarketAxess Holdings Inc. reported a 13.5% year-over-year increase in average daily volume (ADV) for May 2024, reaching $32.2 billion. The company also announced a 4% rise in total revenue for Q1 2024, hitting $210 million, with earnings per share at $1.92.
Analyst firms Keefe, Bruyette & Woods and Citi have recently adjusted their outlook on the company, with the former reducing its price target to $230 while maintaining a Market Perform rating, and the latter reaffirming its Buy rating with a $310 price target.
These are recent developments for MarketAxess, which has seen mixed results in various segments. For instance, the company experienced a downturn in U.S. high-yield ADV, falling 13.1% to $1.3 billion, but saw significant growth in emerging markets and Eurobonds segments, with ADVs increasing by 21.8% and 24.8%, respectively.
MarketAxess has also reported advancements in trading protocols and workflow tools, with total portfolio trading volume soaring by 136.2%, and about 55% executed on the company's X-Pro platform.
InvestingPro Insights
In light of Jefferies' recent adjustments to MarketAxess Holdings Inc.'s outlook, InvestingPro data provides additional context to understand the company's financial health and market position. With a market capitalization of $7.75 billion and a Price/Earnings (P/E) ratio of 29.79, which adjusts to 30.12 over the last twelve months as of Q1 2024, MarketAxess trades at a significant earnings multiple. This is complemented by a stable dividend yield of 1.45% as of May 2021, reflecting the company's ability to maintain consistent shareholder payouts, a trend supported by a history of raising dividends for 10 consecutive years.
InvestingPro Tips highlight that MarketAxess has maintained dividend payments for 16 consecutive years and that its cash flows can sufficiently cover interest payments, indicating a level of financial stability. However, 4 analysts have revised their earnings downwards for the upcoming period, suggesting that investors should monitor the company's future earnings potential closely. Additionally, the company's liquid assets exceed short-term obligations, which is a positive sign of liquidity.
For investors seeking deeper insights, there are additional InvestingPro Tips available on MarketAxess, which can be found at https://www.investing.com/pro/MKTX. These tips could provide valuable guidance, especially when considering the company's high Price/Book multiple of 5.88 and the recent adjustments in analyst expectations.
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