By Sam Boughedda
Atlantic Equities analyst Simon Clinch upgraded CME Group (NASDAQ:CME) from Neutral to Overweight on Friday, with a $235 price target.
The price target set represents a potential 20% upside from current levels.
Clinch upgraded the stock based on a recent pullback in its valuation "despite having the strongest fundamental backdrop of the US exchanges."
"Cash equities and options delivered upside to our expectations, while derivatives volumes were more mixed," added the analyst. "CME has seen its valuation correct sharply in recent months, bringing its multiples back down towards historic median levels at a time when fundamentals remain the most robust of our US exchange companies."
Atlantic downgraded the stock earlier this year on concerns that inflation expectations had driven its valuation beyond underlying fundamentals.
However, they now "believe much of that excess has been removed and the shares now offer an attractive return to our target price, supported by an estimated dividend yield of more than 4% on a forward basis."
CME Group shares are trading 1% higher Friday, despite an initial dip earlier in the session.