MarketAxess Earnings: Better Trading Conditions Drive Revenue Growth, but Market Share Lags

Wide-moat-rated MarketAxess reported decent fourth-quarter results that were largely in line with our expectations as the firm benefited from higher trading volume industrywide. The firm's uninspiring market share performance, however, remains a concern. Fourth-quarter revenue increased 10.9% to $197.2 million, or 6.6% when adjusted for the acquisition of Pragma. Meanwhile, earnings per share increased 16.5% to $1.84 from $1.58 last year, although the company did benefit from an unusually low provision for income taxes in the quarter. As we incorporate these results, we do not plan to materially alter our $305 per share fair value estimate for MarketAxess, and we see the shares as undervalued at current prices.