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MarketAxess (MKTX) Up 36% YTD: What's Driving the Stock?
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MarketAxess Holdings Inc. (MKTX - Free Report) has been benefiting from robust commissions derived from higher trading volumes. Constant buyouts and effective capital position have also been acting as tailwinds.
Shares of the leading electronic platform operator have gained 35.6% on a year-to-date basis compared with the industry’s rally of 3.5%. The Zacks S&P 500 composite has risen 12.9% in the said time frame. Notably, the company has a market capitalization of $19.5 billion.
The company has beat estimates in each of the trailing four quarters, the average surprise being 2.71%.
Will the Bull Run Continue?
MarketAxess remains well poised for growth courtesy of robust commissions, which account for significant portion of the company’s top line. The trend continued in the first nine months of 2020, where commissions made up 92.4% of the company’s revenues. Notably, higher commissions were driven by variable transaction fees and distribution fees derived from the company’s core product offerings — U.S. High Grade, U.S. High Yield, Eurobond and Emerging Markets.
Though the credit market conditions have somewhat started recovering in the third quarter, market volatilities induced by the COVID-19 pandemic are likely to persist in the days ahead. The company has been gaining traction from market volatility, which is likely to provide a boost to the trading volumes that in turn fuels the most important driver of revenues — commission. Further, MarketAxess’ strong presence in the Open Trading marketplace not only reduces transaction costs but also enables newer market participants to trade with investors and dealer firms.
Moreover, the company has been making every effort to undertake buyouts and collaborations. This, in turn, has enhanced the company’s product offerings and enabled it to foray into newer markets. These initiatives and high commissions have been bolstering the company’s revenues, which have witnessed a five-year CAGR of 14% and the momentum continued in the first nine months of 2020 with 35.7% year-over-year rise. Also, the Zacks Consensus Estimate for 2020 revenues indicates year-over-year improvement of 33.4%.
Deal to acquire MuniBrokers, which focuses on the company’s efforts to expand presence in the municipal bond market, is one of the noteworthy deals. MarketAxess is also on course to acquire the Regulatory Reporting Hub from Deutsche Borse Group.
Furthermore, the company’s international business remains well positioned to grow from a strong global client network with constant client additions.
Additionally, the cash position of MarketAxess remains robust, evident from its cash and cash equivalents that improved 14.9% from the 2019-end level. The company has strong cash generating abilities through which it continues to invest in business. It also paves the way for an accelerated capital deployment via share buybacks and dividend hikes.
Share Price Performance of Peers & Zacks Rank
MarketAxess’ price performance fares better compared with the other companies’ stock movements in the same space, such as Nasdaq, Inc. (NDAQ - Free Report) and Intercontinental Exchange Inc. (ICE - Free Report) which have rallied 18.9% and 12.3%, respectively, on a year-to-date basis. Meanwhile, Cboe Global Markets, Inc. (CBOE - Free Report) has lost 23.5% during the same time frame.
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
MarketAxess (MKTX) Up 36% YTD: What's Driving the Stock?
MarketAxess Holdings Inc. (MKTX - Free Report) has been benefiting from robust commissions derived from higher trading volumes. Constant buyouts and effective capital position have also been acting as tailwinds.
Shares of the leading electronic platform operator have gained 35.6% on a year-to-date basis compared with the industry’s rally of 3.5%. The Zacks S&P 500 composite has risen 12.9% in the said time frame. Notably, the company has a market capitalization of $19.5 billion.
The company has beat estimates in each of the trailing four quarters, the average surprise being 2.71%.
Will the Bull Run Continue?
MarketAxess remains well poised for growth courtesy of robust commissions, which account for significant portion of the company’s top line. The trend continued in the first nine months of 2020, where commissions made up 92.4% of the company’s revenues. Notably, higher commissions were driven by variable transaction fees and distribution fees derived from the company’s core product offerings — U.S. High Grade, U.S. High Yield, Eurobond and Emerging Markets.
Though the credit market conditions have somewhat started recovering in the third quarter, market volatilities induced by the COVID-19 pandemic are likely to persist in the days ahead. The company has been gaining traction from market volatility, which is likely to provide a boost to the trading volumes that in turn fuels the most important driver of revenues — commission. Further, MarketAxess’ strong presence in the Open Trading marketplace not only reduces transaction costs but also enables newer market participants to trade with investors and dealer firms.
Moreover, the company has been making every effort to undertake buyouts and collaborations. This, in turn, has enhanced the company’s product offerings and enabled it to foray into newer markets. These initiatives and high commissions have been bolstering the company’s revenues, which have witnessed a five-year CAGR of 14% and the momentum continued in the first nine months of 2020 with 35.7% year-over-year rise. Also, the Zacks Consensus Estimate for 2020 revenues indicates year-over-year improvement of 33.4%.
Deal to acquire MuniBrokers, which focuses on the company’s efforts to expand presence in the municipal bond market, is one of the noteworthy deals. MarketAxess is also on course to acquire the Regulatory Reporting Hub from Deutsche Borse Group.
Furthermore, the company’s international business remains well positioned to grow from a strong global client network with constant client additions.
Additionally, the cash position of MarketAxess remains robust, evident from its cash and cash equivalents that improved 14.9% from the 2019-end level. The company has strong cash generating abilities through which it continues to invest in business. It also paves the way for an accelerated capital deployment via share buybacks and dividend hikes.
Share Price Performance of Peers & Zacks Rank
MarketAxess’ price performance fares better compared with the other companies’ stock movements in the same space, such as Nasdaq, Inc. (NDAQ - Free Report) and Intercontinental Exchange Inc. (ICE - Free Report) which have rallied 18.9% and 12.3%, respectively, on a year-to-date basis. Meanwhile, Cboe Global Markets, Inc. (CBOE - Free Report) has lost 23.5% during the same time frame.
Notably, MarketAxess carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>