Digital Transformation And Rising Middle Class Will Drive Mexican Markets

Published
13 Jul 25
Updated
08 Aug 25
AnalystHighTarget's Fair Value
Mex$53.00
25.7% undervalued intrinsic discount
08 Aug
Mex$39.36
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1Y
30.3%
7D
-2.8%

Author's Valuation

Mex$53.0

25.7% undervalued intrinsic discount

AnalystHighTarget Fair Value

Key Takeaways

  • Rapid innovation in trading services and technology is set to expand participation and boost both transactional and recurring revenue streams for the exchange.
  • Increasing financial literacy and middle class wealth in Mexico are expected to drive significant long-term retail investor growth and earnings compounding.
  • Structural stagnation in listings, rising costs, competitive and technological pressures, and global fintech disruption all threaten future revenue growth and profitability.

Catalysts

About Bolsa Mexicana de Valores. de
    Bolsa Mexicana de Valores, S.A.B. de C.V.
What are the underlying business or industry changes driving this perspective?
  • Analysts broadly agree that the launch of CCP services will improve risk management and drive trading volumes, but this may be understated; rapid adoption and demonstrated value in times of stress could catalyze a much larger shift of OTC and interdealer activity onto BMV platforms, creating a structural increase in revenue and long-term expansion of net margins.
  • The introduction of liquidity alternatives and revised fee structures is expected to boost participation, but given the swift rebound in market share and elimination of friction for retail access, BMV could see an unprecedented acceleration in retail and institutional trading, supporting a step-change in recurring transactional revenues and higher operating leverage.
  • The pipeline of multiple imminent IPOs and the revival of the local equity market, supported by simplified listing regimes, may signal a sustained, multi-year migration of Mexican companies to public markets, driving steady growth in listing fees, ancillary services, and long-duration maintenance revenues as household savings increasingly flow into equities.
  • With the aggressive rollout of next-generation digital and AI-enabled trading, surveillance, and post-trade systems, BMV is positioning itself as LatAm's most technologically advanced exchange, unlocking operational efficiencies, enabling expanded product offerings like tokenization, and facilitating global interoperability-amplifying both revenue growth and margin expansion.
  • Rapidly growing financial literacy and rising middle class wealth in Mexico, combined with the democratization of low-fee trading and data access for retail investors, sets the stage for a powerful, secular rise in local retail participation; this dynamic is likely to drive double-digit growth in both transactional revenues and platform data services, with a long runway for compounding earnings growth.

Bolsa Mexicana de Valores. de Earnings and Revenue Growth

Bolsa Mexicana de Valores. de Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • This narrative explores a more optimistic perspective on Bolsa Mexicana de Valores. de compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
  • The bullish analysts are assuming Bolsa Mexicana de Valores. de's revenue will grow by 8.6% annually over the next 3 years.
  • The bullish analysts assume that profit margins will shrink from 41.0% today to 39.4% in 3 years time.
  • The bullish analysts expect earnings to reach MX$2.1 billion (and earnings per share of MX$3.8) by about August 2028, up from MX$1.7 billion today. The analysts are largely in agreement about this estimate.
  • In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 21.1x on those 2028 earnings, up from 13.1x today. This future PE is greater than the current PE for the MX Capital Markets industry at 11.2x.
  • Analysts expect the number of shares outstanding to decline by 1.28% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 16.08%, as per the Simply Wall St company report.

Bolsa Mexicana de Valores. de Future Earnings Per Share Growth

Bolsa Mexicana de Valores. de Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Persistent migration of investment flows into passive products and ETFs listed on international exchanges is shrinking trading volumes on the BMV, and the earnings call confirms that local market trading contracted by 9% year-on-year, directly risking future revenue and earnings growth.
  • Despite optimism about imminent IPOs, the company acknowledges that only one IPO is confirmed soon and five others are merely confidential filings, highlighting the ongoing structural stagnation in Mexican listings; with listing and maintenance revenues accounting for around one-eighth of total income, this trend threatens to limit long-term revenue expansion.
  • Costs are under sustained upward pressure from necessary technology upgrades, regulatory compliance, and cybersecurity, as illustrated by a 6% year-on-year rise in operating expenses and ongoing plans for heavy CapEx investment until at least 2027, which could compress net margins even if revenues rise.
  • BIVA, the new competitor, is eroding BMV's historic market dominance-despite market share rebounding to 81%, recovering lost ground has required fee reductions and special initiatives, which may depress fee revenue and overall profitability going forward.
  • The rise of global fintech alternatives like direct tokenization, cross-border capital raising, and alternative trading venues-areas where the BMV is still only in exploratory or infrastructure-preparation phases-threatens to divert listings and trading activity away, putting long-term pressure on both transactional revenues and earnings stability.

Valuation

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

  • The assumed bullish price target for Bolsa Mexicana de Valores. de is MX$53.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Bolsa Mexicana de Valores. de's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  • However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of MX$53.0, and the most bearish reporting a price target of just MX$36.0.
  • In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be MX$5.4 billion, earnings will come to MX$2.1 billion, and it would be trading on a PE ratio of 21.1x, assuming you use a discount rate of 16.1%.
  • Given the current share price of MX$40.07, the bullish analyst price target of MX$53.0 is 24.4% 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.

How well do narratives help inform your perspective?

Disclaimer

AnalystHighTarget 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 AnalystHighTarget 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 AnalystHighTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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