On Monday, Piper Sandler adjusted the price target for NYSE:CBOE, CBOE Holdings shares, to $210 from the previous $203, while maintaining an Overweight rating on the stock.
The firm's decision follows a record-breaking trading session on Friday, where CBOE saw an unprecedented volume of index option contracts traded.
The exchange experienced a historic day when 7.99 million index option contracts were executed, breaking the past record of 7.11 million set on February 6, 2018, known as "volmageddon." The recent surge included a significant volume of trades in both S&P 500 (SPX) and Volatility Index (VIX) options.
Specifically, 4.3 million contracts were traded for SPX options, marking the fifth-highest day on record, and 3.4 million contracts for VIX options, the fourth-highest to date.
The analyst from Piper Sandler attributed this spike in trading activity to market reactions following the jobs report released last week and subsequent market sell-off.
They suggested that this indicates a shift back to a market environment heavily influenced by macroeconomic headlines, such as rate cuts, potential recession, US election outcomes, and geopolitical tensions.
The expectation is that these conditions will provide a tailwind for CBOE's index derivative products, including SPX options, VIX options, and futures, among others.
The firm reiterated its positive stance on CBOE Holdings' shares, anticipating that the company will benefit from the heightened market volatility and increased trading activity.
In other recent news, CBOE Global Markets reported a significant 10% year-over-year increase in net revenue, reaching a record $514 million.
This robust performance was primarily driven by higher volumes in cash and spot markets, a strong showing in derivatives, and growth in the Data and Access Solutions business. Additionally, the company experienced a 21% growth in adjusted diluted earnings per share (EPS), which rose to $2.15.
JPMorgan upgraded CBOE Holdings from Underweight to Neutral, raising the price target to $195 following the release of CBOE's second-quarter financial results for 2024.
The firm's decision was influenced by recent performance indicators from CBOE and an anticipated period of heightened volatility expected to drive increased activity in CBOE's flagship products, including VIX and SPX options.
In other recent developments, Citi has also upgraded CBOE's price target to $200, maintaining a neutral rating on the stock. This adjustment follows CBOE's reported over 3% increase after the announcement of their second-quarter earnings, supported by a raised organic net revenue guidance.
Despite 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. The company has reaffirmed its full-year 2024 adjusted expense guidance of $795 million to $805 million.
InvestingPro Insights
Following Piper Sandler's price target adjustment for CBOE Holdings, InvestingPro data reveals a nuanced picture of the company's financial health. CBOE's P/E ratio stands at 24.61, indicating a premium valuation relative to near-term earnings growth. Despite a slight revenue decline of 2.2% over the last twelve months as of Q2 2024, the company has demonstrated a quarterly revenue growth of 7.29% in Q2 2024. This suggests a potential rebound or seasonal influence on the company's financial performance.
InvestingPro Tips highlight that CBOE has consistently rewarded its shareholders, raising its dividend for 9 consecutive years and maintaining dividend payments for 15 consecutive years. The company's dividend yield as of May 2024 is 1.26%, with a notable dividend growth of 23.08% over the last twelve months. Moreover, analysts have revised their earnings projections upwards for the upcoming period, reflecting optimism about the company's profitability, which has been confirmed over the last year. These insights, along with the fact that CBOE is trading near its 52-week high, may reinforce the positive outlook shared by Piper Sandler.
For investors seeking a deeper dive into CBOE's financials and future prospects, there are additional InvestingPro Tips available at InvestingPro, providing comprehensive analysis and predictions.
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