MarketAxess Holdings Inc. Faces Slowdown Amid Strong Earnings Growth
MarketAxess Holdings Inc. (MKTX), valued at a market cap of $9.8 billion, operates a significant electronic trading platform that caters to institutional investors and broker-dealers. Headquartered in New York, the company facilitates access to global liquidity across various fixed-income products, including U.S. high-grade corporate bonds, emerging markets, high-yield bonds, European bonds, U.S. agency bonds, credit derivatives, and more.
Stock Performance Lags Behind Market
Over the past 52 weeks, MKTX’s stock performance has been lackluster compared to the broader market. While MKTX has seen a gain of nearly 13.7%, the S&P 500 Index ($SPX) surged by 31.8% during the same period. Year to date, MKTX is down 10.6%, while SPX saw a robust increase of 25.8%.
Looking closer, MKTX’s underperformance becomes even clearer when considering the Financial Select Sector SPDR Fund’s (XLF) impressive 45.4% gain over the past year and 36.3% uptick so far in 2023.
Strong Q3 Earnings, But Stock Falls
On November 6, shares of MKTX declined by 1.5% following the release of its Q3 earnings. The company reported a 20% year-over-year revenue increase to $206.7 million, surpassing Wall Street expectations of $205.5 million. Additionally, MKTX’s earnings per share (EPS) rose 30.1% to $1.90, exceeding the consensus estimate of $1.82. This impressive performance was mainly due to solid growth in commission revenues from U.S. high-grade, emerging markets, and Eurobonds, as well as a significant rise in service revenues. The company also achieved a record portfolio trading average daily volume of $1.1 billion.
Analysts project that MKTX’s EPS will increase by 7% this fiscal year, ending in December, reaching $7.37. Notably, the company has a strong history of surpassing earnings expectations, achieving this in each of the last four quarters.
Analyst Ratings and Price Target Adjustments
The consensus rating among the 14 analysts covering MKTX is a “Moderate Buy,” with four “Strong Buy,” nine “Hold,” and one “Moderate Sell” rating.
On November 7, UBS reiterated a “Buy” rating on MKTX and raised its price target to $335. This Street-high price target suggests a notable 28% upside from current levels. The mean price target of $278.75 indicates a modest potential upside of 6.5% from MKTX’s present price.
On the date of publication, Neharika Jain had no positions in the securities mentioned. All information in this article is for informational purposes only. For more details, please refer to the Barchart Disclosure Policy.
The views expressed here are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
