MarketAxess Holdings Inc. (NASDAQ:MKTX) last week reported its latest third-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. MarketAxess Holdings reported in line with analyst predictions, delivering revenues of US$164m and statutory earnings per share of US$1.78, suggesting the business is executing well and in line with its plan. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for MarketAxess Holdings from 13 analysts is for revenues of US$743.7m in 2021 which, if met, would be a notable 15% increase on its sales over the past 12 months. Per-share earnings are expected to ascend 10% to US$8.18. Before this earnings report, the analysts had been forecasting revenues of US$731.2m and earnings per share (EPS) of US$8.01 in 2021. So the consensus seems to have become somewhat more optimistic on MarketAxess Holdings' earnings potential following these results.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 6.0% to US$558. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic MarketAxess Holdings analyst has a price target of US$621 per share, while the most pessimistic values it at US$500. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. Next year brings more of the same, according to the analysts, with revenue forecast to grow 15%, in line with its 14% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.0% next year. So although MarketAxess Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around MarketAxess Holdings' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple MarketAxess Holdings analysts - going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for MarketAxess Holdings that you need to take into consideration.
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