Market Overview

Analysts See Risks To EPS Upside From CBOE-Bats Deal

The First US-Listed Marijuana ETF Ignites Today
Citigroup Reinstates Coverage Of Bats Global Markets Ahead Of Q3 Earnings
Related CBOE
CBOE, CME, EEM And XLU: 'Fast Money' Picks For December 20
5 Stocks Predicted To Fall Further This Week By Artificial Intelligence Software

Goldman Sachs sees risks to EPS upside from CBOE Holdings, Inc (NASDAQ: CBOE)'s $3.2 billion acquisition of Bats Global Markets Inc (BATS:BATS) from potential P/E de-rating.

"Our hypothetical pro forma analysis suggests a potential deal would result in $3.41- 3.52 in adjusted EPS for CBOE for 2018, or 22%-26% accretion vs. GSe and 17%-20% to cons. estimate," analyst Alexander Blostein wrote in a note.

"At the same time we see risk that a change in CBOE's product mix (away from higher multiple Index Options/Futures and toward cash equities and multi-listed options) and potentially higher leverage (current CBOE is debt free) could result in a 21%-32% P/E de-rating for the stock based on public comps with similar revenue mix," Blostein continued.

Related Link: CBOE, Bats Deal Viewed Favorably By Jefferies

Further, the analyst expects pressure on the multiple as the deal may be a signal of "(1) limited EPS growth at CBOE (consensus implies flat EPS for 2016) and (2) risks from rising competition in the multi-listed options space (from BATS and NDAQ/ISE."

Blostein reiterated his Sell rating on CBOE with price target of $61.

Shares of CBOE traded recently at $67.01.

Latest Ratings for BATS

Oct 2016CitigroupReinstatesNeutral
Oct 2016JefferiesMaintainsHold
Sep 2016Goldman SachsMaintainsNeutral

View More Analyst Ratings for BATS
View the Latest Analyst Ratings

Posted-In: Alexander Blostein Goldman SachsAnalyst Color News Reiteration M&A Analyst Ratings


Related Articles (CBOE + BATS)

View Comments and Join the Discussion!

Latest Ratings

SSTIImperial CapitalDowngrades49.0
OSPNImperial CapitalDowngrades20.0
ENBLStifel NicolausUpgrades17.0
FAROGabelli & Co.Upgrades0.0
BDCLongbow ResearchDowngrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Google Unveils Its New Public Wi-Fi Platform

Demand For Cal-Maine Foods' Nutritionally Enhanced Offerings Goes Flat