Recent remarks from MarketAxess Holdings (MKTX) at the Barclays Financial Services Conference put a spotlight on its next phase of growth, including deeper automation, non U.S. credit expansion and emerging markets opportunities.
See our latest analysis for MarketAxess Holdings.
Even with these growth levers, the 1 year total shareholder return of negative 29.18 percent and 3 year total shareholder return of negative 38.11 percent show longer term momentum has faded, despite a modest recent recovery in the 30 day share price return of 3.88 percent from a last close of 167.24 dollars.
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With revenues and profits still growing, but the share price languishing well below past highs and roughly 20 percent under the average analyst target, is MarketAxess now a mispriced compounder, or is the market correctly discounting its future growth?
With MarketAxess last closing at 167.24 dollars, the most followed narrative points to a materially higher fair value anchored around future earnings power.
The analysts have a consensus price target of 218.833 dollars for MarketAxess Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of 274.0 dollars, and the most bearish reporting a price target of just 168.0 dollars.
Read the complete narrative.
Curious how a steady revenue glide path, rising margins and a premium earnings multiple combine into that fair value? The narrative lifts the lid on those projections, but keeps the boldest assumptions just out of view until you dive in.
Result: Fair Value of $200.90 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, that upside case could unravel if competitive pressure intensifies and high grade block trades remain stubbornly phone based, limiting electronic share gains.
Find out about the key risks to this MarketAxess Holdings narrative.
Step away from analyst targets and the picture looks quite different. On a price to earnings basis of 28.3 times versus a fair ratio of 14.9 times, and above both industry and peer averages, MarketAxess screens as expensive. Is the market overpaying for quality, or just pricing in reality?
See what the numbers say about this price — find out in our valuation breakdown.