Cboe Upgraded To Buy: Deutsche Bank Sees Strong Revenue Growth And Margin Gains Through 2025

Deutsche Bank analyst Brian Bedell upgraded Cboe Global Markets, Inc. CBOE to Buy from Hold and raised the price target to $222.

The analyst’s bullish stance reflects their updated outlook that CBOE will sustain strong revenue growth through at least 2025.

Bedell expects continued volatility in equity markets, especially following the U.S. elections, which will likely increase demand for index and volatility options and futures.

Additionally, the analyst anticipates organic growth driven by ongoing product innovation and rising adoption of options, particularly with the upcoming launch of index options on Robinhood.

Also, the analyst projects stronger revenue growth to lead to positive operating leverage next year, allowing management to exceed its expectations for operating margin stability, as discussed on the recent third-quarter earnings call.

Notably, this month, the company reported third-quarter adjusted EPS of $2.22, which surpassed the $2.19 estimate, and sales of $532.0 million, beating the expected $530.8 million.

The analyst adds that along with a modest level of share repurchases, this should support high single-digit EPS growth in 2025 and 2026, surpassing their previous forecast of low-to-mid single-digit growth.

Overall, the analyst revised the forecasts for the company, now projecting 8% revenue growth in 2025 and 6% growth in 2026, up from the previous estimates of 6% and 3%, respectively.

Despite robust growth in index product revenue of 55% and 35% in 2022 and 2023, the analyst anticipates index revenue will still grow by at least 10% in 2025, even with challenging comparisons and high volume levels.

Investors can gain exposure to the stock via Listed Funds Trust Horizon Kinetics Blockchain Development ETF BCDF and iShares U.S. Broker-Dealers & Securities Exchanges ETF IAI.

Price Action: CBOE shares are up 1.88% at $200.56 at the last check Monday.

Photo by Ground Picture on Shutterstock

Read Next:

• Cboe Faces Downgrade: Analyst Warns Of Earnings Risks Amid Valuation Concerns And Sluggish Volume