Market Overview

Virtu Financial Slapped With Underperform At Credit Suisse: Here's Why

Share:
Related VIRT
Benzinga's Top Upgrades, Downgrades For November 8, 2017
56 Biggest Movers From Yesterday
The Implosion Of Public Markets (Seeking Alpha)

In a report published Friday, Credit Suisse analyst Ashley N. Serrao initiated coverage of Virtu Financial Inc (NASDAQ: VIRT) with an Underperform rating and a price target of $21.

Analyst Ashley N Serrao wrote, "…all electronification is not created equal - specifically, transforming the mode of communication from voice to electronic Request for Quote (RFQ) doesn't create opportunities for Virtu."

"We are not constructive on treasuries or swap execution facilities (SEFs) as new business opportunities for Virtu, absent a willingness to commit more capital and take risk. We believe the franchise will make greater inroads in more commoditized products such as equities and FX," Serrao added.

In the report Credit Suisse noted that the various regulations that aim to curb market making activities at larger banks actually tend to restrict future growth opportunities, such as penetrating India and China, and swap execution facilities.

The company's current stock valuation is high in view of the risks associated with its business. Virtu continues to face fierce competition from other non-bank market makers who have already made inroads into the SEF and treasury arenas.

"One specialty ETF market maker has easily outgrown Virtu's entire equity business (60% of Virtu's revs in 2012 to 117% in 2014) with most of the growth coming from the next frontier for ETFs –Europe. We also expect banks to invest in electronic solutions to leverage customer relationships and internalize natural flow," the report stated.

Latest Ratings for VIRT

DateFirmActionFromTo
Nov 2017CitigroupUpgradesSellNeutral
Oct 2017JP MorganDowngradesNeutralUnderweight
Oct 2017Evercore ISI GroupInitiates Coverage OnIn-Line

View More Analyst Ratings for VIRT
View the Latest Analyst Ratings

Posted-In: Credit Suisse VetrAnalyst Color Initiation Analyst Ratings

 

Related Articles (VIRT)

View Comments and Join the Discussion!