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Growth Is A Challenge For CBOE, JPMorgan Says In Downgrade

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Growth Is A Challenge For CBOE, JPMorgan Says In Downgrade

While trading floors at Cboe Global Markets, Inc. (BATS: CBOE) are scheduled to reopen next week, this is unlikely to be a meaningful catalyst to drive volumes, which remain tepid, according to JPMorgan.

The CBOE Analyst

Kenneth Worthington downgraded the rating for Cboe Global Markets from Overweight to Neutral, while reducing the price target from $104 to $101.

The CBOE Thesis

Trading volumes in key products, VIX Futures and VIX Options, remain soft, while the S&P 500 (SPX) index show low levels of activity, Worthington said in a Tuesday downgrade note. (See his track record here.)

Although trading volumes in smaller businesses, like cash equity and multi-listed options, are strong, if the trading volumes in the flagship VIX and SPX products remain tepid, there will be pressure on the earnings outlook, the analyst said. 

CBOE is looking out for growth via acquisitions to expand in new geographies, Worthington said. 

Such growth will be “challenging to execute and despite both time and investment, success is not certain,” the analyst said. 

The Members Exchange, a new bourse backed by large Wall Street firms, is scheduled for a launch in the latter half of the third quarter, according to JPMorgan.

This spells “more risks for trading volumes and the stock,” Worthington said. 

CBOE Price Action

Shares of CBOE were down 1.27% at $103.75 at the time of publication Tuesday. 

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Latest Ratings for CBOE

DateFirmActionFromTo
Jul 2020Piper SandlerDowngradesOverweightNeutral
Jun 2020Goldman SachsDowngradesNeutralSell
Jun 2020JP MorganDowngradesOverweightNeutral

View More Analyst Ratings for CBOE
View the Latest Analyst Ratings

 

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Posted-In: JPMorgan Kenneth WorthingtonAnalyst Color Downgrades Price Target Analyst Ratings

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StockFirmActionPT
ORAJP MorganUpgrades82.0
ADSKOppenheimerUpgrades300.0
PRAPiper SandlerUpgrades
PEImperial CapitalMaintains13.0
QTSKeyBancMaintains70.0
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