On Jun 28, 2016, we issued an updated research report on MarketAxess Holdings Inc. MKTX.
MarketAxess undertakes various growth initiatives to enhance its operations and to diversify its product portfolio. This apart, the insurer has an impressive inorganic story supported by prudent acquisitions.
MarketAxess has been witnessing improvement in commissions driven by the changing market dynamics. This, in turn, has resulted in steady revenue growth over the past few years. We expect strategies of pursuing international opportunities, a compelling economic market model and a diversified product suite of U.S. high-grade floating rate and other credit bonds to boost MarketAxess' volumes going forward.
The insurer boasts a solid capital position backed by strong liquidity and operating cash flow, which not only lessens balance sheet risk but also opens up scopes of capital deployment. Frequent share buybacks and dividend increases also help the company create value for shareholders. Factors like these make the stock an attractive pick for yield seeking investors.
However, higher costs due to the consistent rise in employee compensation and benefits coupled with other operating expenses limit the company’s margin expansion. Also, new entrants increase competition and raise risks of market share loss. Industry volatility and challenging regulations are other headwinds.
With respect to the surprise trend, this Zacks Rank #3 (Hold) securities exchange delivered positive surprise in only one of the last four quarters.
Nonetheless, based on these positives, the Zacks Consensus Estimate moved north by 0.6% to $3.11 for 2016 and by 2% to $3.76 for 2017.
Stocks to Consider
Some better-ranked stocks in the finance sector include Bats Global Markets, Inc. BATS, American Capital Agency Corp. AGNC and American Sands Energy Corporation AMSE. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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