X: Earnings Momentum Will Support Future Outperformance As Business Model Shows Durable Resilience

The Analyst Price Target for TMX Group has nudged higher to approximately C$62.63 from C$62.50, as analysts point to resilient earnings momentum, steady revenue growth expectations, and valuation support from recent target revisions across the Street.

Analyst Commentary

Recent research updates present a mixed but generally constructive backdrop for TMX Group, with several firms adjusting price targets while reiterating positive views on the company’s earnings profile and strategic execution.

Bullish Takeaways

Bullish analysts highlight that TMX’s earnings momentum and resilient volumes are not fully reflected in the current share price, which supports the potential for higher valuation multiples over time.
Upward target revisions emphasize confidence that TMX’s ongoing transformation and execution can drive revenue growth and margin expansion, which positions the stock as a quality compounder.
The combination of defensive characteristics and structural growth drivers is seen as attractive in a volatile market backdrop, and this underpins multiple Outperform ratings.
Some analysts expect TMX’s valuation to converge toward peer averages as the company continues to deliver consistent results and demonstrate durability in its business model.

Bearish Takeaways

Bearish analysts, while not outright negative, have trimmed price targets to reflect a more cautious stance on near term upside, given recent share performance and normalized volatility levels.
There is concern that trading activity, particularly in certain product segments, may not sustain recent strength, which could limit the pace of top line growth and re rating potential.
Equal Weight and reduced target views suggest that, at current levels, the risk reward profile may be more balanced, especially if volumes or earnings surprises fall short of expectations.
Some research notes indicate that without clear positive catalysts in upcoming quarters, TMX’s valuation could remain range bound relative to more growth oriented exchange peers.

What's in the News

Tracxn Technologies Limited entered a strategic agreement with TMX Datalinx, making Tracxn the exclusive Canadian provider of global private market intelligence to TMX Datalinx's institutional client network. The partnership expands access to structured data on startups, emerging sectors, and private company transactions (Key Developments).
TMX Group Limited was added to the FTSE All World Index, which may enhance its visibility and potential ownership among global index-tracking and benchmark-aware investors (Key Developments).

Valuation Changes

Consensus Analyst Price Target has risen slightly, with fair value moving from CA$62.50 to approximately CA$62.63, reflecting a marginally more constructive outlook.
Discount Rate has fallen slightly, easing from about 7.48 percent to 7.48 percent, indicating a modest reduction in the perceived risk profile.
Revenue Growth assumptions are essentially unchanged, holding near 7.03 percent, signaling stability in top line expectations.
Net Profit Margin expectations have remained effectively stable at roughly 33.42 percent, implying no material shift in projected profitability.
Future P/E has risen slightly from about 31.97x to 32.03x, suggesting a modest uptick in the valuation multiple applied to forward earnings.

Expansion in derivatives, data analytics, and digital platform investments is driving higher-margin, recurring revenues and positioning the company for robust future growth.
Globalization through acquisitions and international listings is diversifying income streams beyond Canadian equities, reducing volatility, and supporting sustained revenue growth.
Shifts toward private funding, global competition, new technologies, cost pressures, and changing investor behavior could undermine TMX's traditional revenue streams and long-term earnings growth.

Catalysts

About TMX Group

Operates exchanges, markets, and clearinghouses primarily for capital markets in Canada, the United States, the United Kingdom, Germany, and internationally.What are the underlying business or industry changes driving this perspective?

The strong momentum in derivatives trading and clearing-driven by increased investor demand for risk management tools amid global volatility, new product launches like the Canada Bank Credit Index Future, and ongoing electronification of markets-positions TMX to capitalize on growing cross-border capital flows, likely supporting higher future revenue and earnings growth.
The accelerating expansion of TMX's Global Insights and Data Analytics division, including double-digit growth in recurring revenue segments like Trayport and VettaFi, is increasing high-margin, predictable income streams and improving overall net margins.
TMX's strategic investments in digital platforms (e.g., post-trade modernization, cloud-based architecture for trading systems, and flexible marketplace technology) directly address the evolving landscape of digital assets and tokenization, providing a future-ready infrastructure and unlocking new sources of transactional and data revenue as digital securities adoption broadens.
The ongoing globalization of TMX's business through acquisitions, international listings (notably the launch and rapid growth of AlphaX US), and cross-selling data/analytics solutions in Europe and North America, is diversifying revenues beyond Canadian equities, reducing earnings volatility, and setting the stage for sustained top-line growth.
Increased activity and resilience in the ETF and capital formation segments, reflected by record ETF listings and robust secondary financings, demonstrates TMX's ability to capture growing demand from passive and algorithmic investors, which bodes well for elevated trading fees and listing revenues in future quarters.

TMX Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming TMX Group's revenue will grow by 7.3% annually over the next 3 years.
Analysts assume that profit margins will increase from 26.6% today to 35.3% in 3 years time.
Analysts expect earnings to reach CA$692.5 million (and earnings per share of CA$2.53) by about September 2028, up from CA$422.0 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 30.5x on those 2028 earnings, down from 36.1x today. This future PE is greater than the current PE for the CA Capital Markets industry at 10.3x.
Analysts expect the number of shares outstanding to grow by 0.13% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.37%, as per the Simply Wall St company report.

TMX Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Expansion of private markets and continued growth of alternative funding sources like private equity and venture capital could diminish the appeal and revenue potential of public market listings on TMX, leading to slower topline growth and weaker capital formation revenues.
Ongoing globalization of capital markets, combined with intensifying competition from larger, more diversified international exchanges, may make it harder for TMX to win large IPOs and high-profile secondary listings, which could pressure core trading and listing revenues while impacting overall market share and earnings growth.
Increasing adoption of blockchain technology, tokenized securities, and decentralized finance may bypass traditional exchange infrastructure and settlement systems in the medium-to-long term, threatening the foundational trading and clearing fee business and potentially compressing net margins over time.
Signs of margin compression from rising operating expenses-driven by recent acquisitions, IT modernization, strategic realignment costs, and regulatory requirements-could eat into earnings and limit the ability to leverage revenue growth into consistent profitability improvement.
Overreliance on established business lines such as equity and derivatives trading exposes TMX to risks from declining domestic trading volumes, fewer high-growth Canadian companies choosing to list publicly, or shifting investor preferences toward passive, low-fee products and alternative asset classes-all of which could constrain both revenue and earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of CA$61.071 for TMX Group based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CA$2.0 billion, earnings will come to CA$692.5 million, and it would be trading on a PE ratio of 30.5x, assuming you use a discount rate of 7.4%.
Given the current share price of CA$54.83, the analyst price target of CA$61.07 is 10.2% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

X: Future Earnings Momentum Will Drive Sector Outperformance Over Peers