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Here's Why You Should Retain MarketAxess (MKTX) Stock Now
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MarketAxess Holdings Inc. (MKTX - Free Report) is well-poised to grow on the back of product expansion and prudent strategic alliances. Increasing total credit average daily volume or ADV is a significant growth indicator.
MarketAxess, with a market cap of $10.6 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.
The Trend in Estimates
The Zacks Consensus Estimate for MarketAxess’ 2022 earnings is pegged at $6.60 per share, which improved 0.2% in past 60 days. The company has witnessed three upward estimate revisions during the same period against two in the opposite direction. In the last four quarters, the company beat earnings estimates thrice and missed once, with an average surprise of 1.9%.
The consensus estimate for 2022 revenues is pegged at $717.5 million, indicating 2.3% growth from that reported in 2021.
Growth Drivers
Rising total credit ADV is a major positive for MKTX’s business. The metric rose 25% year over year in November to a record volume of $13.1 billion. The total credit ADV figure also beat the previous record set in March of last year.
Its stabilizing fees, thanks to a rise in U.S. high-grade average fees per million and cost-curbing measures are likely to boost profitability in the coming days.
An enhanced global product portfolio is buoying MKTX’s performance. Market share gains across most of its products are likely to drive its results. Selective acquisitions and strategic alliances are helping the company to boost its portfolio.
Some major partnerships with large entities like BlackRock, S&P Dow Jones Indices, China Foreign Exchange Trade System, Tradeweb Markets and Bloomberg are helping the cause.
MarketAxess keeps introducing products and modifying the existing ones to expand itsproduct portfolio, which can lead to higher bond trading volumes. It also provides the company with a competitive edge.
Rising trading velocity is boosting MarketAxess’ top line. Increasing fixed-income trading automation and all-to-all trading are significantly aiding its trading velocity.
The company’s strong balance sheet enables it to support shareholder-friendly moves. It exited the third quarter with total cash and cash equivalents, and investments of $352 million, and had only $83.3 million in operating lease liabilities.
Key Concerns
There are a few factors that are impeding growth of MarketAxess. A decrease in the free cash flow can be concerning. The metric declined 25.8% year over year to $166.8 million in the first nine months of 2022.
Also, the company's forward 12-month price-to-earnings ratio of 37.85X is way above the industry average of 26.94X, marking it overvalued. Nevertheless, we believe that a systematic and strategic plan of action will drive MKTX’s long-term growth.
Milwaukee, WI-based MGIC Investment is a private mortgage insurance and other products provider. The Zacks Consensus Estimate for MTG’s current-year bottom line is pegged at $2.86 per share, indicating 49.7% year-over-year growth.
Headquartered in Sao Paulo, Brazil, XP is a leading financial products and services provider. The Zacks Consensus Estimate for XP’s 2022 bottom line is pegged at $1.43 per share, indicating 23.3% year-over-year growth.
Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings signals a 74.4% improvement from a year ago.
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Here's Why You Should Retain MarketAxess (MKTX) Stock Now
MarketAxess Holdings Inc. (MKTX - Free Report) is well-poised to grow on the back of product expansion and prudent strategic alliances. Increasing total credit average daily volume or ADV is a significant growth indicator.
MarketAxess, with a market cap of $10.6 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.
The Trend in Estimates
The Zacks Consensus Estimate for MarketAxess’ 2022 earnings is pegged at $6.60 per share, which improved 0.2% in past 60 days. The company has witnessed three upward estimate revisions during the same period against two in the opposite direction. In the last four quarters, the company beat earnings estimates thrice and missed once, 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 is pegged at $717.5 million, indicating 2.3% growth from that reported in 2021.
Growth Drivers
Rising total credit ADV is a major positive for MKTX’s business. The metric rose 25% year over year in November to a record volume of $13.1 billion. The total credit ADV figure also beat the previous record set in March of last year.
Its stabilizing fees, thanks to a rise in U.S. high-grade average fees per million and cost-curbing measures are likely to boost profitability in the coming days.
An enhanced global product portfolio is buoying MKTX’s performance. Market share gains across most of its products are likely to drive its results. Selective acquisitions and strategic alliances are helping the company to boost its portfolio.
Some major partnerships with large entities like BlackRock, S&P Dow Jones Indices, China Foreign Exchange Trade System, Tradeweb Markets and Bloomberg are helping the cause.
MarketAxess keeps introducing products and modifying the existing ones to expand itsproduct portfolio, which can lead to higher bond trading volumes. It also provides the company with a competitive edge.
Rising trading velocity is boosting MarketAxess’ top line. Increasing fixed-income trading automation and all-to-all trading are significantly aiding its trading velocity.
The company’s strong balance sheet enables it to support shareholder-friendly moves. It exited the third quarter with total cash and cash equivalents, and investments of $352 million, and had only $83.3 million in operating lease liabilities.
Key Concerns
There are a few factors that are impeding growth of MarketAxess. A decrease in the free cash flow can be concerning. The metric declined 25.8% year over year to $166.8 million in the first nine months of 2022.
Also, the company's forward 12-month price-to-earnings ratio of 37.85X is way above the industry average of 26.94X, marking it overvalued. 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 are MGIC Investment Corporation (MTG - Free Report) , XP Inc. (XP - Free Report) and NerdWallet, Inc. (NRDS - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Milwaukee, WI-based MGIC Investment is a private mortgage insurance and other products provider. The Zacks Consensus Estimate for MTG’s current-year bottom line is pegged at $2.86 per share, indicating 49.7% year-over-year growth.
Headquartered in Sao Paulo, Brazil, XP is a leading financial products and services provider. The Zacks Consensus Estimate for XP’s 2022 bottom line is pegged at $1.43 per share, indicating 23.3% year-over-year growth.
Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings signals a 74.4% improvement from a year ago.