Citi maintains a positive outlook on MarketAxess Holdings Inc. (NASDAQ: MKTX), a leading electronic trading platform for fixed-income securities, as the firm raises its price target on the stock. The new target is set at $325.00, up from the previous $310.00, while the Buy rating remains unchanged.
MarketAxess has exhibited robust trading activity in September, with total credit average daily volume (ADV) increasing by 40% year-over-year. This growth has been attributed to a strong performance across various products, including a record investment grade (IG) ADV of $8.4 billion. The IG market share results were notably better than anticipated, even in the face of vigorous issuance and a higher percentage of overall private trading activity. However, the high yield (HY) share did not meet expectations, which could be due to the highest month of issuance since 2021.
The environment for MarketAxess remains favorable, with overall volumes showing sustained strength. Citi's outlook on the credit market is constructive, anticipating benefits from potential increases in volatility and higher spreads. Additionally, a shift towards fixed income and the ongoing trend toward the electronification of trading processes are expected to have a positive impact.
Citi's confidence in MarketAxess is further bolstered by the company's continued innovation, particularly through enhancements to trading protocols and the introduction of new workflow tools. These developments are seen as pivotal to MarketAxess's growth trajectory leading into 2025.
In summary, Citi reiterates its Buy rating for MarketAxess, underlining the company's strong September performance and the promising factors that could contribute to the credit market's resilience and growth. The raised price target reflects Citi's optimistic view of the company's future prospects, driven by both market conditions and strategic advancements in its trading platform.
MarketAxess Holdings Inc. has reported a 10% rise in total revenue for the second quarter of 2024, reaching $198 million, mainly driven by robust commission revenue and the successful integration of recently acquired company, Pragma. The firm's diluted earnings per share hit $1.72, and a new share repurchase program valued at $200 million was launched. However, the company expects an additional $10 million in expenses in the second half of the year, primarily for marketing, travel, and technology.
In other developments, MarketAxess and BlackRock (NYSE:BLK) have enhanced their partnership, integrating select MarketAxess credit trading protocols, pricing, and data into BlackRock's Aladdin order execution management system. This enhancement is an extension of the collaboration that began in 2013, focusing on Open Trading and analytics.
Citi, maintaining its Buy rating on MarketAxess, projects that the company will gain market share in investment grade and high yield credit due to a combination of market conditions. Increased exchange-traded fund activity and a decline in private trading are also expected to contribute positively to MarketAxess's market share.
InvestingPro Insights
Building on Citi's positive outlook for MarketAxess Holdings Inc. (NASDAQ: MKTX), recent data from InvestingPro provides additional context to the company's financial performance and market position.
MarketAxess has demonstrated strong financial health, with a revenue of $777.51 million in the last twelve months as of Q2 2024, representing a growth of 6.07%. This aligns with Citi's observations of robust trading activity and increased average daily volumes. The company's profitability is also noteworthy, with an impressive operating income margin of 40.87% for the same period.
InvestingPro Tips highlight MarketAxess's commitment to shareholder value. The company has raised its dividend for 10 consecutive years and has maintained dividend payments for 16 consecutive years. This consistent dividend policy underscores the company's financial stability and could be attractive to income-focused investors.
Another InvestingPro Tip notes that MarketAxess has seen a strong return over the last three months, which is reflected in the 27.23% price total return over that period. This recent performance supports Citi's bullish stance and increased price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for MarketAxess, providing a deeper understanding of the company's financial position and market dynamics.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.
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