Citi Says 'Stick With The Sell' At CBOE

In a report published Thursday, Citi analysts maintained a Sell rating on

, while reducing the price target from $54 to $52, after the recent pullback in the company's shares following the announcement of 4Q results. Although the stock has underperformed recently, the analysts believe downside remains due to "steep valuation + disappointing volumes + still elevated expectations." The "volume picture remains weak" so far in 2015. Moreover, CBOE Holdings may not be able to meet the Street forecasts for 1Q15 and 2015, the analysts said. The EPS estimates for 2015, 2016 and 2017 have been reduced from $2.30 to $2.25, from $2.67 to $2.62 and from $2.96 to $2.91, respectively, to reflect "lower than forecast March to date volumes." While the share price has declined, "the P/E multiple has not corrected (still ~25x ‘15E), as Street expectations have moved down in lockstep with the price – and we think the multiple could ease," Citi noted in the report. Referring to the VIX volumes, the analysts said that there is no "one overriding factor" affecting this. The various factors impacting volumes include "1) institutional trading interest for VIX appears reduced more recently, particularly among hedging and "roll down" trades; 2) we believe macro hedge funds may be incrementally shifting capital to other strategies – currency trading is picking up for instance; and, 3) the next leg of product growth could be slow(er) – we previously identified four "waves" of growth including market makers, HFs, proprietary traders, long-only Asset Managers, and retail (ETPs)." The analysts believe that valuation could be an overhang on the share price going ahead, unless the company is able to reignite volume growth.