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MarketAxess Holdings Inc MKTX

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Morningstar’s Analysis

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Launching Coverage of MarketAxess With a Wide Moat, Stable Moat Trend, and a $355 FVE

Michael Miller Equity Analyst

Analyst Note

| Michael Miller |

We are initiating coverage on MarketAxess with a $355 per share fair value estimate, wide moat rating, and an Exemplary capital allocation rating. We consider the stock 13.1% overvalued based on the $408.61 closing price on Nov. 1. Our fair value translates to an 2021 enterprise value/EBITDA ratio of 31 times. MarketAxess will likely see its earnings fall slightly in 2021 after a very strong 2020, as U.S. corporate bond trading volumes industry-wide have fallen from cyclical highs to cyclical lows as the lack of credit spread volatility has weighed on bond market activity. That said, MarketAxess’ secular growth drivers are still intact, and we see a long runway of double-digit revenue growth for the firm.

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Company Profile

Business Description

Founded in 2000, MarketAxess is a leading electronic fixed-income trading platform that connects broker/dealers and institutional investors. The company is primarily focused on credit based fixed income securities with its main trading products being U.S. investment-grade and high-yield bonds, Eurobonds, and Emerging Market corporate debt. Recently the company has expanded more aggressively into Treasuries and municipal bonds with the acquisitions of LiquidityEdge and MuniBrokers in 2019 and 2021, respectively. The company also provides pre- and post-trade services with its acquisition of Regulatory Reporting Hub from Deutsche Börse Group in 2020 adding to its product offerings.

55 Hudson Yards, 15th Floor
New York, NY, 10001
T +1 212 813-6000
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 606