Marex stock undervalued versus peers, HSBC highlights growth and resilience

On Thursday, HSBC initiated coverage on Marex Group PLC (NASDAQ: MRX) stock with a Buy rating and a price target of $33.00. The endorsement comes with an optimistic outlook on the company’s future, citing several factors that suggest a strong growth trajectory.

The company is anticipated to sustain secular growth, benefit from limited competition, and face high barriers to entry in its market segment. With expectations of a 13% compound annual growth rate (CAGR) in revenue from 2023 to 2026, Marex Group is positioned to capitalize on the retreat of large banks from certain segments, which has allowed it to strengthen its role as a leading acquirer.

Since its initial public offering in April 2024, Marex has demonstrated robust performance and has announced additional acquisitions, indicating its capacity to scale and maintain operational resilience through inorganic growth. The firm's strategy to distribute a quarterly dividend has been highlighted, with a recent disbursement of $10 million in the third quarter of 2024, resulting in a dividend yield of 2%.

In terms of valuation, Marex Group is considered to be attractively priced when compared to its peers. The stock is currently trading at a price-to-earnings (PE) ratio of 8.8x and a price-to-book value (PBV) of 2.0x. This is contrasted with StoneX, its closest comparable, which is trading at a PE ratio of 12.0x for the year 2025. This assessment suggests that Marex offers a compelling value proposition for investors.

In other recent news, Marex Group PLC has been making significant strides in its strategic growth plans. The company's third-quarter results for 2024 indicate an adjusted operating profit between $78-81 million, with adjusted diluted earnings per share (EPS) projected to be in the range of $0.74 to $0.76. Citi, who recently resumed coverage of Marex with a Buy rating, estimates the figures at the lower end of the range.

Marex has also been active in acquisitions, expanding its geographical reach into the Middle East and diversifying its product offerings into foreign exchange and renewables. These include the acquisitions of Hamilton Court Group, Aarna Capital Limited, and Dropet.

Barclays (LON:BARC) has upgraded Marex's stock to Overweight, reflecting confidence in the company's aggressive acquisition strategy and potential for continued expansion.

Moreover, Marex has priced a public offering of $600 million in senior notes due in 2029, with the proceeds intended to bolster working capital, fund growth, and serve other corporate purposes. In addition, the company has announced the pricing of public offerings of 8,472,333 and 7 million ordinary shares respectively.

These developments reflect Marex's commitment to strategic growth and diversification, and are subject to regulatory approvals and other customary closing conditions.

InvestingPro Insights

Recent data from InvestingPro adds depth to HSBC's bullish stance on Marex Group PLC (NASDAQ: MRX). The company's market capitalization stands at $2.03 billion, with a price-to-earnings ratio of 11.0, slightly higher than HSBC's reported figure but still indicating potential value. Marex's revenue for the last twelve months as of Q3 2024 was $1.54 billion, with a notable gross profit margin of 98.79%, underscoring the company's operational efficiency.

InvestingPro Tips highlight Marex's strong profitability and shareholder returns. The company has demonstrated consistent profitability over the last decade, aligning with HSBC's positive outlook on its growth trajectory. Additionally, Marex has been rewarding shareholders with growing dividend payments, supporting the analyst's note on the company's dividend strategy.

These insights complement HSBC's analysis, particularly regarding Marex's attractive valuation and growth potential. For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Marex Group PLC, providing a deeper understanding of the company's financial health and market position.

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