Deutsche Bank Cuts CBOE Earnings Estimates

Deutsche Bank reiterates its Hold on CBOE Holdings, Inc. CBOE, while reducing its price target to $64 from $69. CBOE closed Friday at $62.46, falling more than 4% after reporting earnings. Adding color to the numbers, the Deutsche Bank analysts say that 2015 consensus estimates will be “difficult to reach for now.”

The analysts see a number of downside risks to the CBOE’s business, including a prolonged low volatility market, with little movement in VIX futures, and more significant competition that could reduce market share and pricing. Specific to the VIX, the analysts say that volumes could decline in the near term with curve flattening.

On the upside, Deutsche Bank says that a macro backdrop could drive higher equity market volatility than expected.

In Q1, Deutsche Bank expects the CBOE to report EPS of $0.56, below the consensus estimates of $0.62. Full-year EPS is expected at $2.48, 4% below consensus.