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Citi Sees BATS Growth Initiatives As 'Tracking To Plan,' But Maintains Neutral

Citi Sees BATS Growth Initiatives As 'Tracking To Plan,' But Maintains Neutral

Citi maintains its Neutral rating and $29 price target on Bats Global Markets Inc (BATS: BATS), despite saying the exchange operator's growth initiatives seem to be tracking to plan.

"We still see the opportunity for outsized growth against peers, particularly in Hotspot (FX) platform, but we would await a deeper pullback before stepping in given the steep post-IPO run-up," analyst William Katz wrote in a note.

Katz noted, "BATS seems to be executing on previously announced growth plans (particularly in FX + Options) and believes macro headwinds should abate shortly, with BREXIT and uncertainty around the Fed temporarily weighing on volume and volatility."

Related Link: The First Analyst Is In On Bats...And It's Not A Good Recommendation

The analyst highlighted Options as the most likely near-term catalyst, as the company remains on track to launch "Auction Options" in 2H2016, with complex options launching in 2016. Katz sees both as potentially accretive to BATS' current revenue capture rate.

"Here we expect EDGX volumes should pick up once other products are launched, as investors will be able to maximize full price-tiering benefits," Katz noted.

The analyst added, "BATS was not overly surprised by elevated volatility in the first quarter, and views that as more of a trend-line, suggesting that second quarter is just a 'short-term blip.'"

Katz said higher capture rates this quarter should partially offset lower volumes as fewer trades are executed at the lowest pricing tier.

At time of writing, shares of Bats were up 0.59 percent at $27.40.

Latest Ratings for BATS

Oct 2016CitigroupReinstatesNeutral
Oct 2016JefferiesMaintainsHold
Sep 2016Goldman SachsMaintainsNeutral

View More Analyst Ratings for BATS
View the Latest Analyst Ratings


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