Tuesday, Jefferies updated its price target for Tradeweb Markets (NASDAQ:TW) shares, increasing it to $109.00 from the previous $105.00, while maintaining a Hold rating on the stock.
The firm's analysis indicated that second-quarter earnings per share for 2024 remain steady at $0.70. Tradeweb's variable trading revenues were adjusted upward by $10 million to $294 million, reflecting a 40% increase year-over-year and a 2% decrease quarter-over-quarter. This revision was attributed to better-than-expected performance in various segments except for Equities.
The report detailed that revenue from Rates was notably higher at $157 million compared to the earlier estimate of $149 million. Credit revenues also saw a significant revision, now expected at $103 million, a substantial increase from the prior $10 million estimate.
Money Markets followed suit, with revenues adjusted to $14 million from the previous $12 million. Despite these increases, Equity revenues were reported at $22 million, which is a 4% rise year-over-year but a 16% fall quarter-over-quarter.
Average daily volumes (ADV) experienced growth across the board, with Cash Credit and Rates Derivatives witnessing the largest percentage changes from previous estimates, both up by 22%.
However, Cash Rates ADV saw a decrease of 4% compared to previous estimates. This decline also contributed to a lower total Rates Fixed Price per Million (FPM) of $2.00, down from the $2.10 previously estimated.
Additionally, Credit FPM was reported at $55.33, which is 15% lower than earlier estimates, as the product mix shifts towards lower-fee protocols like Portfolio Trading (PT).
Looking ahead, Jefferies models adjusted expenses for the second quarter of 2024 and the full years of 2024 and 2025 at $203 million, $804 million, and $1,000 million, respectively. These figures compare with Tradeweb's fiscal year 2024 guidance, which forecasts expenses at the top end of the $755 million to $805 million range.
In other recent news, Tradeweb Markets Inc . has experienced significant changes in its executive team and board, as well as notable financial developments. Amy Clack has been announced as the new Chief Administrative Officer, taking responsibility for operations, business integration, risk management, and corporate services. However, President Thomas Pluta is set to depart from Tradeweb, with no successor announced yet.
Tradeweb has also seen the resignation of board member Murray Roos, who left not due to disagreements with the company's operations or policies. These changes come as Tradeweb continues its growth trajectory, with record trading volumes and increased revenues.
The company reported a Q1 revenue of $408.7 million, a 24.1% increase from the previous year, slightly missing the consensus estimate of $410.03 million. Its adjusted diluted earnings per share of $0.71 matched analyst estimates.
Tradeweb also introduced RFQ Edge, a feature for request-for-quote trading in the U.S. Credit sector. The company plans to acquire Institutional Cash Distributors (ICD) for $785 million, a move expected to increase earnings within the first 12 months after completion.
Analysts from William Blair have given Tradeweb an Outperform rating, citing potential for significant earnings growth. Deutsche Bank (ETR:DBKGn) also maintained a Hold rating on the stock. These are some of the recent developments in Tradeweb's ongoing growth and expansion in the financial technology sector.
InvestingPro Insights
Tradeweb Markets (NASDAQ:TW) has garnered attention with its robust year-over-year revenue growth and a positive outlook from analysts. According to InvestingPro data, the company has a market capitalization of $24.82 billion and has experienced a significant revenue growth of 17.4% over the last twelve months as of Q1 2024. This financial health is further reflected in the company's gross profit margin, which stands at an impressive 94.26% for the same period.
InvestingPro Tips suggest that while Tradeweb is trading at a high earnings multiple with a P/E ratio of 55.59, the company is expected to be profitable this year. Moreover, the company has outperformed with a strong return of 60.83% over the past year, indicating a bullish trend for investors. For those considering adding Tradeweb to their portfolio, it's worth noting that the company's liquid assets exceed its short-term obligations, underscoring its financial stability.
For more detailed analysis and additional InvestingPro Tips, including the company's high Price / Book multiple and its trading performance relative to near-term earnings growth, visit https://www.investing.com/pro/TW. There are 8 more tips available on InvestingPro, and readers can utilize the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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