CME Group initiated with a Sector Perform at RBC Capital

RBC Capital analyst Ashish Sabadra initiated coverage of CME Group with a Sector Perform rating and $235 price target. CME has underperformed peers due to concerns about competitor exchange FMX gaining market share and the potential decline in interest rate futures trading volume due to the rate cut cycle, notes the analyst. While the firm believes competitive headwinds “appear manageable and reflected in the valuations” and that increased Treasury issuance should provide medium- to long-term secular tailwinds, it also believes the stock could be range-bound until there is a change in narrative and/or change in the capital allocation policy.