On Friday, CBOE Holdings (NYSE: CBOE) received an updated price target from Citi, with the figure being raised to $200 from the previous $180, while the firm maintained a Neutral rating on the stock. This adjustment follows CBOE's reported over 3% increase after the announcement of their second-quarter earnings, which was supported by a raised organic net revenue guidance and robust activity levels in July.
According to the firm's analysis, CBOE's ongoing technology investments and strategic focus on expanding in international markets, especially Asia, may offset the slower growth in index options. Despite observing the lower end of CBOE's fiscal year 2024 guidance range for its Data and Access segment, management emphasized the growing international demand for its data offerings. This demand is anticipated to provide a long-term positive impact.
The firm's commentary highlighted that while there is a positive outlook on CBOE's long-term narrative, and the stock might benefit from the currently elevated market volatility, the firm suggests waiting for a more opportune moment to invest. The firm's stance remains cautious, recommending investors to seek a more favorable entry point into the stock.
In other recent news, Cboe Global Markets (NYSE:CBOE) has reported a 10% year-over-year increase in net revenue, reaching an all-time high of $514 million. The company also experienced a 21% growth in adjusted diluted earnings per share (EPS), which rose to $2.15. The robust performance was mainly driven by higher volumes in cash and spot markets, a strong showing in derivatives, and growth in the Data and Access Solutions business.
Cboe's strategic initiatives include leveraging its global network to facilitate access to US markets and expanding its product offerings. The company is also eyeing significant growth opportunities in the US market and has reaffirmed its full-year 2024 adjusted expense guidance of $795 million to $805 million. Despite recording an $81 million charge related to the wind-down of the Cboe Digital spot market, the company remains optimistic about the rest of the year and its ability to capitalize on market opportunities.
InvestingPro Insights
As Citi raises its price target for CBOE Holdings, it's worth considering additional metrics and insights from InvestingPro that shed light on the company's financial health and market position. CBOE's commitment to increasing shareholder value is evident as it has consistently raised its dividend for 9 consecutive years, with a notable dividend growth of 15.44% over the last twelve months as of Q1 2024. This dedication to returning value to shareholders is further underscored by the fact that CBOE has maintained dividend payments for 15 consecutive years.
Moreover, the company is trading at a low P/E ratio of 24.86 relative to near-term earnings growth, with a PEG ratio of just 0.15, suggesting that the stock may be undervalued given its earnings growth prospects. On the flip side, the revenue growth has experienced a slight decline of 5.78% over the last year, which aligns with Citi's cautious stance on the Data and Access segment's growth.
Despite the challenges, analysts remain optimistic, having revised their earnings upwards for the upcoming period, and predict that the company will remain profitable this year, as it has been over the last twelve months. These insights, along with the additional 9 InvestingPro Tips available, provide a broader context for investors considering CBOE's stock in light of the recent price target update.
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