Investors in MarketAxess Holdings Inc. (NASDAQ:MKTX) had a good week, as its shares rose 6.1% to close at US$541 following the release of its annual results. MarketAxess Holdings reported in line with analyst predictions, delivering revenues of US$689m and statutory earnings per share of US$7.85, 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the 13 analysts covering MarketAxess Holdings are now predicting revenues of US$774.6m in 2021. If met, this would reflect a notable 12% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 3.1% to US$8.26. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$758.6m and earnings per share (EPS) of US$8.34 in 2021. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small lift in to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of US$577, suggesting the analysts are focused on earnings as the driver of value creation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on MarketAxess Holdings, with the most bullish analyst valuing it at US$669 and the most bearish at US$530 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of MarketAxess Holdings'historical trends, as next year's 12% revenue growth is roughly in line with 15% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.6% 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 most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$577, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for MarketAxess Holdings going out to 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for MarketAxess Holdings that you should be aware of.
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