On Thursday, Piper Sandler adjusted the price target for CME Group (NASDAQ:CME), a leading derivatives marketplace, to $225 from the previous target of $235. The firm sustained its Overweight rating on the stock. The revision followed CME Group's (NASDAQ:CME) second-quarter earnings report for 2024, which showcased an adjusted earnings per share (EPS) of $2.56. This figure aligned with Piper Sandler's estimation and exceeded the consensus estimate by three cents.
CME Group's quarterly results indicated that both revenues and expenses slightly missed Piper Sandler's forecasts, causing a combined negative impact of $0.02 on the EPS. However, this was counterbalanced by a higher non-operating income of $155 million, which was approximately $4 million above the firm's expectations, contributing an additional $0.01 to the EPS.
Additionally, a lower tax rate of 23.1%, compared to the anticipated 23.5%, provided a further boost of $0.01 to the EPS.
The discrepancy in revenue against Piper Sandler's estimates was attributed to a slightly lower blended average revenue per contract (RPC (NYSE:RES)) than projected, coming in at $0.708 versus the estimated $0.710. Excluding licensing fees, core expenses for CME Group were reported at $388 million, which was $2 million below what Piper Sandler estimated.
Despite the minor discrepancies in the second-quarter performance, CME Group has decided to maintain its full-year guidance for 2024 unchanged.
The Overweight rating by Piper Sandler indicates the firm's positive outlook on CME Group's stock, suggesting that they expect it to outperform the average market return within the next 12 to 18 months. The new price target of $225 suggests that Piper Sandler sees potential for growth in the stock's value, albeit slightly less than previously estimated.
In other recent news, Analysts from Oppenheimer maintained an Outperform rating on CME Group stock but reduced the shares target to $228 from the previous $245 due to the current interest rate environment. Meanwhile, Citi maintained a Buy rating on CME Group, emphasizing the firm's strong trading activity in the second quarter of 2024. However, JPMorgan downgraded CME Group from Neutral to Underweight due to potential competition from FMX Exchange.
In terms of personnel, CME Group announced Mike Dennis as the new Global Head of Fixed Income.
The company also reported record trading volumes for June and Q2 of 2024, with an 8% increase in average daily volume (ADV) in June, reaching 25.3 million contracts, and a new ADV record for Q2 at 26 million contracts. These recent developments provide crucial insights for investors interested in CME Group.
InvestingPro Insights
In light of Piper Sandler's recent price target adjustment for CME Group (NASDAQ:CME), InvestingPro provides additional context that may be valuable for investors. According to InvestingPro data, CME Group boasts a market capitalization of $71.02 billion and a solid dividend yield of 4.99% as of the latest data. This is particularly noteworthy as the company has raised its dividend for 5 consecutive years, emphasizing its commitment to returning value to shareholders. Moreover, CME Group has maintained dividend payments for an impressive 22 consecutive years, which is a testament to its financial stability and reliability as an income-generating investment.
Evaluating the company's performance, CME Group has a P/E ratio of 21.77, reflecting a relatively high valuation compared to near-term earnings growth. However, this is balanced by the fact that analysts have revised their earnings upwards for the upcoming period, suggesting optimism about the company's future profitability, which has been consistent over the last twelve months.
For investors seeking comprehensive analysis and additional insights, InvestingPro offers a range of tips, including those that highlight CME Group's profitability this year and its high return over the last decade. These insights, coupled with the latest real-time metrics, can provide a deeper understanding of the company's financial health and future prospects.
To access a full suite of InvestingPro Tips for CME Group, including those not mentioned here, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 6 additional InvestingPro Tips available for CME Group that can further inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.