On Jan 23, 2015, Zacks Investment Research upgraded MarketAxess Holdings Inc. (MKTX) by a notch to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Earnings estimates of MarketAxess witnessed a riseon the back of a favorable growth outlook for 2014. Improved volatility also drove trading volumes in the fourth quarter, wherein total volumes grew 16.5% year over year, while average daily volumes remained flat. Total volumes were also higher than 4.5% growth witnessed in the third quarter, flattish growth in the second quarter and 16.8% increase in the first quarter.
Furthermore, improved performance in the European business, appreciation in bond trading activity and expense control are boosting organic growth. The latest corporate bond alliance with BlackRock Inc. (BLK) should further drive results. These factors also support the company’s risk-free balance sheet and modest capital deployment, thereby instilling confidence among investors as well.
Additionally, this fixed-income trading exchange operator delivered positive earnings surprises in one of the last four quarters, breaking even in two, with an average beat of 0.05%. MartketAxess generated a strong modest six-month return (based on yesterday’s closing price) of about 47.8%, against 6.6% clocked by the Nasdaq index.
Upward estimate revisions on the stock reflect optimism. The Zacks Consensus Estimate for the 2014 and 2015 moved north by 2.1% and 2.2% to $1.92 and $2.29 per share, respectively, in the last 60 days. On a year-over-year basis, EPS is expected to escalate by about 6.1% in 2014 and 19% in 2015.
Moreover, the Most Accurate estimate for MartketAxess’ 2014 earnings currently stand at $1.94 a share, resulting in an Earnings ESP of +1.04%. With no downward estimate revision, this indicates a likely earnings beat for the year.
Other Stocks to Consider
Investors interested in financial stocks could also consider Ladder Capital Corp. (LADR) and FleetCor Technologies Inc. (FLT), both of which sport the same Zacks Rank as MarketAxess.
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