On Wednesday, UBS reaffirmed its Buy rating on shares of CME Group (NASDAQ:CME), with a consistent price target of $250.00. The firm adjusted its second quarter 2024 earnings per share (EPS) estimate for CME Group to $2.54, down from the previous $2.83 estimate, noting that initial volume expectations were overly optimistic after a strong performance in April. The revised forecast is slightly above the Street's $2.52 consensus.
CME Group's (NASDAQ:CME) May trading metrics prompted UBS to revise its Q2 futures volume estimate downward by 12%, primarily due to anticipated reductions in interest rate and equities trading volumes. Additionally, slight adjustments were made to the firm's pricing forecasts for equities, metals, and foreign exchange (FX) trading, while the revenue per contract (RPC (NYSE:RES)) forecast was increased by 0.6% due to a shift in the mix of traded products.
UBS projects an 8% revenue growth for CME Group in the fiscal year 2024, followed by a 5% increase in fiscal year 2025. EPS growth is anticipated to be 6% for both years. The firm's positive outlook for CME Group's stock is supported by the expectation that Street estimates will continue to rise, coupled with ongoing high levels of interest rate and geopolitical uncertainty.
The firm also highlighted that CME Group's stock is currently trading significantly below its historical average relative to the S&P 500, which adds to the constructive stance on the shares. UBS's position remains positive as it expects the market to adjust its estimates upward in response to the evolving trading landscape and CME Group's financial performance.
InvestingPro Insights
As UBS maintains its positive outlook on CME Group (NASDAQ:CME), the latest InvestingPro data complements the firm's analysis by providing a deeper dive into the company's financial health and market performance. With a robust market cap of $73.37 billion and a P/E ratio of 23.24, CME Group showcases a strong presence in the market. The company's revenue growth of 10.02% over the last twelve months as of Q1 2024 indicates a healthy upward trajectory, while a notable dividend yield of 4.83% reflects its commitment to shareholder returns.
InvestingPro Tips highlight that CME Group has not only raised its dividend for 5 consecutive years but has also maintained dividend payments for 22 consecutive years, showcasing a reliable track record for investors seeking consistent income. Additionally, with 14 analysts having revised their earnings upwards for the upcoming period, there's an optimistic sentiment surrounding the company's future earnings potential. For those looking to delve deeper into CME Group's investment potential, there are additional tips available on InvestingPro, including insights on profitability and long-term returns. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover more about what makes CME Group a compelling consideration for your portfolio.
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