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Why Seasoned Investors are Retaining MarketAxess (MKTX) Stock
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MarketAxess Holdings Inc. (MKTX - Free Report) is well poised to grow on the back of new and modified products and a prudent inorganic growth strategy. Furnishing new and unique products will provide MarketAxess with a competitive advantage.
MarketAxess — with a market cap of $13.4 billion — is a leading multi-dealer trading platform that offers institutional investors access to global liquidity in products. It derives revenues from commissions, information-related services and post-trade services.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
2022 Estimates
The Zacks Consensus Estimate for MarketAxess’ 2022 earnings is pegged at $7.46 per share, indicating a 10.2% year-over-year rise. It has witnessed two upward estimate revisions in the past 30 days against none in the opposite direction. In the last four quarters, the company beat earnings estimates twice and missed the same on the other two occasions, with an average surprise of 1.9%.
The consensus estimate for 2022 revenues stands at $780.6 million.
Growth Drivers
Increasing trading velocity is boosting MarketAxess’ revenues. Rising fixed income trading automation and all-to-all trading are significantly aiding its trading velocity. While revenues have witnessed a CAGR of 15% over the past decade, the momentum is expected to continue in the future.
The company keeps introducing products and modifying the existing ones to expand the product portfolio, which can lead to higher bond trading volumes. It also provides the company with a competitive edge. It recently launched its first tradable index, MKTX 400 Index, to provide its traders with actionable data solutions for the fixed income market. The index will track 400 U.S. dollar-denominated investment-grade corporate bond performance. These bonds are expected to have more liquidity than the market average.
It also introduced Axess All Prints, adding to its existing intra-day fixed income tape with real-time transacted price service. This product will work with the most actively traded debt instruments in the United Kingdom and the European Union. The new addition will provide real-time trade-by-trade pricing data and publish prices on more than 15,000 executed trades across almost 4,250 unique instruments for a day of trading. The company is expected to bring new products in the coming days, which will further boost trading volumes.
MarketAxess focuses on strategic alliances and acquisition of businesses or technologies that enable it to enter new markets and provide new products or services. Acquisitions like MuniBrokers, Regulatory Reporting Hub from Deutsche Börse Group, LiquidityEdge and others are aiding its top-line growth. Strategic alliances with BlackRock, Inc. (BLK - Free Report) , S&P Dow Jones Indices and others are helping MKTX expand its footprint in different markets.
MarketAxess’ deal with BlackRock’s Aladdin Trading Network enabled the company to decrease liquidity fragmentation and improve pricing. It also partnered with the China Foreign Exchange Trade System to enable its global investors to better access China’s onshore bond market.
MKTX’s strong balance sheet enables the company to support shareholder-friendly moves. It exited the fourth quarter with total cash and cash equivalents of $506.7 million, which increased sequentially from $432.7 million. It had only $88.4 million in operating lease liabilities. MarketAxess’ healthy liquidity paves the way for accelerated capital deployment for employees, expansion of the trading platform and infrastructure, new products as well as geographic diversification.
It enhances shareholders’ value through share repurchase and dividend hikes. In January 2022, the company raised the dividend by 6%, marking the 13th consecutive year of dividend increase. Further, it announced a new share buyback program of $150 million, which commences from first-quarter 2022. MKTX’s strong financial flexibility will continue to support shareholders’ value-boosting efforts.
Key Concerns
There are a few factors that are impeding the growth of MarketAxess. Rising costs are putting pressure on its bottom-line growth. Expenses for 2022 are projected in the range of $385-$415 million, indicating a significant increase from the 2021 level of $361.7 million. Also, a decrease in free cash flow can be concerning. The metric declined 12.8% year over year to $296.7 million last year. Nevertheless, we believe that a systematic and strategic plan of action will drive MKTX’s long-term growth.
Alerus Financial delivers financial products and services to businesses and consumers. Based in Grand Forks, ND, ALRS’ bottom line for 2022 has witnessed three upward revisions and no movement in the opposite direction in the past 60 days. Alerus Financial beat earnings estimates in each of the last four quarters, with an average of 34.6%.
PhenixFIN invests in debt and equity securities of small and middle-market companies. The consensus mark for PFX’s 2022 earnings has improved 93.3% in the past 30 days. Headquartered in New York, PhenixFIN beat earnings estimates thrice in the last four quarters.
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Why Seasoned Investors are Retaining MarketAxess (MKTX) Stock
MarketAxess Holdings Inc. (MKTX - Free Report) is well poised to grow on the back of new and modified products and a prudent inorganic growth strategy. Furnishing new and unique products will provide MarketAxess with a competitive advantage.
MarketAxess — with a market cap of $13.4 billion — is a leading multi-dealer trading platform that offers institutional investors access to global liquidity in products. It derives revenues from commissions, information-related services and post-trade services.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
2022 Estimates
The Zacks Consensus Estimate for MarketAxess’ 2022 earnings is pegged at $7.46 per share, indicating a 10.2% year-over-year rise. It has witnessed two upward estimate revisions in the past 30 days against none in the opposite direction. In the last four quarters, the company beat earnings estimates twice and missed the same on the other two occasions, with an average surprise of 1.9%.
MarketAxess Holdings Inc. Price and EPS Surprise
MarketAxess Holdings Inc. price-eps-surprise | MarketAxess Holdings Inc. Quote
The consensus estimate for 2022 revenues stands at $780.6 million.
Growth Drivers
Increasing trading velocity is boosting MarketAxess’ revenues. Rising fixed income trading automation and all-to-all trading are significantly aiding its trading velocity. While revenues have witnessed a CAGR of 15% over the past decade, the momentum is expected to continue in the future.
The company keeps introducing products and modifying the existing ones to expand the product portfolio, which can lead to higher bond trading volumes. It also provides the company with a competitive edge. It recently launched its first tradable index, MKTX 400 Index, to provide its traders with actionable data solutions for the fixed income market. The index will track 400 U.S. dollar-denominated investment-grade corporate bond performance. These bonds are expected to have more liquidity than the market average.
It also introduced Axess All Prints, adding to its existing intra-day fixed income tape with real-time transacted price service. This product will work with the most actively traded debt instruments in the United Kingdom and the European Union. The new addition will provide real-time trade-by-trade pricing data and publish prices on more than 15,000 executed trades across almost 4,250 unique instruments for a day of trading. The company is expected to bring new products in the coming days, which will further boost trading volumes.
MarketAxess focuses on strategic alliances and acquisition of businesses or technologies that enable it to enter new markets and provide new products or services. Acquisitions like MuniBrokers, Regulatory Reporting Hub from Deutsche Börse Group, LiquidityEdge and others are aiding its top-line growth. Strategic alliances with BlackRock, Inc. (BLK - Free Report) , S&P Dow Jones Indices and others are helping MKTX expand its footprint in different markets.
MarketAxess’ deal with BlackRock’s Aladdin Trading Network enabled the company to decrease liquidity fragmentation and improve pricing. It also partnered with the China Foreign Exchange Trade System to enable its global investors to better access China’s onshore bond market.
MKTX’s strong balance sheet enables the company to support shareholder-friendly moves. It exited the fourth quarter with total cash and cash equivalents of $506.7 million, which increased sequentially from $432.7 million. It had only $88.4 million in operating lease liabilities. MarketAxess’ healthy liquidity paves the way for accelerated capital deployment for employees, expansion of the trading platform and infrastructure, new products as well as geographic diversification.
It enhances shareholders’ value through share repurchase and dividend hikes. In January 2022, the company raised the dividend by 6%, marking the 13th consecutive year of dividend increase. Further, it announced a new share buyback program of $150 million, which commences from first-quarter 2022. MKTX’s strong financial flexibility will continue to support shareholders’ value-boosting efforts.
Key Concerns
There are a few factors that are impeding the growth of MarketAxess. Rising costs are putting pressure on its bottom-line growth. Expenses for 2022 are projected in the range of $385-$415 million, indicating a significant increase from the 2021 level of $361.7 million. Also, a decrease in free cash flow can be concerning. The metric declined 12.8% year over year to $296.7 million last year. Nevertheless, we believe that a systematic and strategic plan of action will drive MKTX’s long-term growth.
Key Picks
Some better-ranked stocks in the broader Finance space include Alerus Financial Corporation (ALRS - Free Report) and PhenixFIN Corporation (PFX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alerus Financial delivers financial products and services to businesses and consumers. Based in Grand Forks, ND, ALRS’ bottom line for 2022 has witnessed three upward revisions and no movement in the opposite direction in the past 60 days. Alerus Financial beat earnings estimates in each of the last four quarters, with an average of 34.6%.
PhenixFIN invests in debt and equity securities of small and middle-market companies. The consensus mark for PFX’s 2022 earnings has improved 93.3% in the past 30 days. Headquartered in New York, PhenixFIN beat earnings estimates thrice in the last four quarters.