Marketaxess Holdings (MKTX) AI Stock Analysis

639 Followers

Top Page

Marketaxess Holdings

(NASDAQ:MKTX)

69Neutral

Marketaxess Holdings has a robust financial position with strong profitability and cash flow management, but faces challenges in revenue growth and valuation concerns. Technical indicators suggest limited downside risk, while strategic growth in trading operations and automation provide a positive outlook. However, the high P/E ratio and pressure on U.S. credit commission revenues weigh on the stock's attractiveness.

Positive Factors

Product Innovation

MKTX is bringing new products, protocols, and innovation to the marketplace at an accelerating pace that can support structural market share gains as they electronify credit markets.

Strategic Initiatives

New block trading solutions in emerging markets and Eurobonds showed substantial growth, highlighting successful strategic initiatives.

Trading Volumes

MarketAxess reported another strong month for volumes as volatility remained at high levels.

Negative Factors

Credit Fees

Credit fees per million for 1Q25 were lower than previous quarter and below estimates, due to a shift in product and protocol mix.

Fee Structure

Lower fee capture is expected due to a protocol and product mix shift towards lower-fee products, as well as lower duration across the platform.

Market Position

US HG and HY market share declined year-over-year, indicating challenges in maintaining market position.

Marketaxess Holdings (MKTX) vs. S&P 500 (SPY)

Market Cap

$8.10B

Dividend Yield1.38%

Average Volume (3M)670.79K

Price to Earnings (P/E)37.5

Beta (1Y)0.23

Revenue Growth7.22%

EPS Growth-15.53%

CountryUS

Employees891

SectorFinancial

Sector Strength87

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)1.87

Shares Outstanding37,501,660

10 Day Avg. Volume644,699

30 Day Avg. Volume670,795

Financial Highlights & Ratios

PEG Ratio-19.97

Price to Book (P/B)5.87

Price to Sales (P/S)0.00

P/FCF Ratio25.53

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$238.75

Price Target Upside8.81% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering10

Marketaxess Holdings Business Overview & Revenue Model

Company DescriptionMarketAxess Holdings Inc., together with its subsidiaries, operates an electronic trading platform for institutional investor and broker-dealer companies worldwide. It offers the access to liquidity in the U.S. investment-grade bonds, U.S. high-yield bonds, and U.S. Treasuries, as well as municipal bonds, emerging market debts, Eurobonds, and other fixed income securities. The company, through its Open Trading protocols, executes bond trades between and among institutional investor and broker-dealer clients in an all-to-all anonymous trading environment for corporate bonds. It also offers trading-related products and services, including composite+ pricing and other market data products to assist clients with trading decisions; auto-execution and other execution services for clients requiring specialized workflow solutions; connectivity solutions that facilitate straight-through processing; and technology services to optimize trading environments. In addition, the company provides various pre-and post-trade services, such as trade matching, trade publication, regulatory transaction reporting, and market and reference data across a range of fixed-income and other products. MarketAxess Holdings Inc. was incorporated in 2000 and is headquartered in New York, New York.

How the Company Makes MoneyMarketAxess makes money primarily through transaction fees charged on trades executed via its electronic platform. These fees are generally a percentage of the notional value of the trade. The company also generates revenue from data services, offering market data products that provide valuable insights and analytics to clients. Moreover, MarketAxess benefits from subscription fees for access to its trading platform and additional tools. The company's earnings are bolstered by strategic partnerships with financial institutions and by expanding its service offerings to new markets and products, such as emerging market bonds and municipal bonds.

Marketaxess Holdings Key Performance Indicators (KPIs)

Any

Average Daily Volume by Type

Average Daily Volume by Type
Measures the trading volume across different types of securities, indicating market activity levels and potential revenue streams.

Chart InsightsMarketAxess is experiencing robust growth in trading volumes, particularly in the Rates segment, which surged 93% year-over-year, reflecting increased client adoption of rates algorithms. Credit volumes also show a positive trend, with a recent uptick. Despite a slight revenue dip, strategic investments in automation and new trading solutions are driving record trading activity, positioning the company well for future growth. However, challenges such as declining U.S. credit commission revenue and new tax reserves pose potential risks.

Data provided by:

Main Street Data

Marketaxess Holdings Financial Statement Overview

Summary

Marketaxess Holdings showcases strong financial health with impressive revenue growth, solid profitability metrics, and effective cash flow management. The company's low leverage and strong capital structure provide stability, while the consistent generation of free cash flow enhances its capacity for future investments. Potential areas for improvement include maintaining EBIT growth and monitoring equity growth rates.

Income Statement

Very Positive

Marketaxess Holdings has demonstrated strong revenue growth with a significant increase from $511.35 million in 2019 to $817.10 million in 2024, indicating a robust upward trajectory. The gross profit margin is consistently high, maintaining above 60% in recent years, with a notable EBIT margin around 40% and improving EBITDA margins. The net profit margin remains stable, reflecting strong profitability, although the slight decline in EBIT from 2020 requires monitoring.

Balance Sheet

Positive

The company's financial leverage is low with a debt-to-equity ratio consistently below 0.1, indicating prudent financial management. The equity ratio is strong, reflecting a solid capital structure with equity financing prevailing. While the return on equity (ROE) is consistently healthy, a slight decrease in equity growth could impact future gains.

Cash Flow

Very Positive

Marketaxess Holdings exhibits a strong free cash flow growth, enhancing from $231.23 million in 2019 to $375.30 million in 2024, reinforcing financial flexibility. The operating cash flow to net income ratio is strong, suggesting efficient cash conversion from earnings. However, cash flow from investing activities is negative, reflecting ongoing capital investments.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
817.10M	752.55M	718.30M	698.95M	689.13M
	Gross Profit
566.53M	482.92M	536.20M	528.03M	532.24M
	EBIT
340.87M	315.02M	326.88M	337.24M	374.73M
	EBITDA
432.77M	395.10M	393.97M	397.51M	417.57M
	Net Income Common Stockholders
274.18M	258.06M	250.22M	257.89M	299.38M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
649.25M	550.96M	430.75M	506.74M	460.86M
	Total Assets
1.79B	2.02B	1.61B	1.53B	1.33B
	Total Debt
72.65M	79.68M	82.68M	88.42M	93.61M
	Net Debt
-471.82M	-371.60M	-348.07M	-418.31M	-367.25M
	Total Liabilities
400.56M	722.10M	526.68M	489.14M	376.37M
	Stockholders Equity
1.39B	1.29B	1.08B	1.04B	955.06M
Cash Flow		Free Cash Flow
375.30M	281.32M	237.36M	231.47M	358.86M
	Operating Cash Flow
385.24M	333.77M	289.23M	282.09M	404.49M
	Investing Cash Flow
-86.94M	-155.29M	-86.27M	-67.69M	68.87M
	Financing Cash Flow
-201.38M	-147.06M	-242.38M	-189.78M	-145.11M

Marketaxess Holdings Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price219.42

Price Trends

50DMA

217.50

Positive

100DMA

213.84

Positive

200DMA

234.86

Negative

Market Momentum

MACD

-0.11

Positive

RSI

50.36

Neutral

STOCH

28.30

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MKTX, the sentiment is Neutral. The current price of 219.42 is below the 20-day moving average (MA) of 221.05, above the 50-day MA of 217.50, and below the 200-day MA of 234.86, indicating a neutral trend. The MACD of -0.11 indicates Positive momentum. The RSI at 50.36 is Neutral, neither overbought nor oversold. The STOCH value of 28.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MKTX.

Marketaxess Holdings Risk Analysis

Marketaxess Holdings disclosed 13 risk factors in its most recent earnings report. Marketaxess Holdings reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Marketaxess Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VIRT	81 Outperform	$6.50B	11.96	23.87%	2.32%	26.02%	142.79%
TW	77 Outperform	$34.32B	59.64	9.14%	0.29%	28.86%	29.26%
IBKR	73 Outperform	$88.39B	28.87	19.26%	0.48%	14.67%	23.59%
MKTX	69 Neutral	$8.10B	37.51	16.25%	1.38%	7.22%	-15.53%
SF	69 Neutral	$10.16B	18.84	11.48%	1.74%	12.85%	20.21%
Sector *	64 Neutral	$12.82B	9.87	7.67%	17000.34%	12.39%	-5.85%
JEF	59 Neutral	$10.87B	18.26	6.38%	2.66%	16.62%	139.24%

* Financial Sector Average

Performance Comparison

MKTX

Marketaxess Holdings

219.42

6.57

3.09%

IBKR

Interactive Brokers

208.00

83.26

66.75%

JEF

Jefferies

51.31

5.36

11.66%

Stifel Financial

98.49

18.16

22.61%

VIRT

Virtu Financial

42.14

19.70

87.79%

Tradeweb Markets

145.45

35.01

31.70%

Marketaxess Holdings Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: -4.13%|

Next Earnings Date:Jul 16, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted several strong areas of growth, particularly in emerging markets, automation, and portfolio trading, along with successful share repurchases. However, challenges remain, including a decline in U.S. credit commission revenue and a slight overall revenue decrease. The establishment of a new tax reserve also adds financial uncertainty.

Q1-2025 Updates

Positive Updates

Strong Growth in U.S. Government Bonds

Achieved a single-day trading record of $102 billion on April 9, with clients leveraging rates algos to execute $36 billion or 11% of the week's trading volume.

Record International and New Product Revenue

Record commission revenue in international and new product areas, including emerging markets, municipals, and U.S. government bonds.

Growth in Automation and Algo Usage

Record trade volumes of $110 billion, up 17%, with 249 active automation clients and 80 clients enabled for the Algo suite, up 25% from the prior year.

Strong Portfolio and Dealer-Initiated Trading

Record total Portfolio Trading (PT) ADV of $1.3 billion and record U.S. credit PT ADV of $1.1 billion. Dealer RFQ and Mid-X ADV was a record $1.9 billion, representing a 45% increase.

Increase in Market Volatility Driving Record Trading ADV

Trading ADV grew 68% year-over-year to a record $57 billion, with a 32% growth in total credit ADV and 93% growth in total rates ADV.

Successful Share Repurchase Program

Repurchased 251,000 shares year-to-date for a total of $52 million, with $173 million remaining on the board authorization.

Negative Updates

Decline in U.S. Credit Commission Revenue

U.S. credit commission revenue decreased by 7%, driven by lower fee per million and lower market share.

Lower Total Revenue Year-Over-Year

Total revenue was $209 million, compared to $210 million in the prior year, with a 2% decrease in commission revenue.

Establishment of New Tax Reserve

A new reserve was established for uncertain tax positions due to a recent ruling, leading to an increase in the expected effective tax rate to 41%-42% on a GAAP basis.

Company Guidance

In the MarketAxess first quarter 2025 earnings call, CEO Chris Concannon highlighted significant achievements driven by strategic initiatives and technological investments. The company recorded a single-day trading record of $102 billion in U.S. government bonds on April 9, bolstered by increased client use of rates algorithms with a 97% passive execution rate. Total trading ADV reached a record $57 billion in April, with U.S. credit and rates growing 32% and 93% year-over-year, respectively. The firm also saw a 42% increase in municipal bonds ADV, and dealer RFQ and Mid-X ADV reached a record $1.9 billion, up 45%. Despite a 2% decrease in total revenue to $209 million, MarketAxess achieved 7% growth in services revenue and maintained expense growth at 2%. The company also announced plans to roll out an enhanced RFQ solution and a high-touch block trading solution, aiming to further capture market share and adapt to the evolving trading environment.

Marketaxess Holdings Corporate Events

Business Operations and StrategyFinancial Disclosures

MarketAxess Reports Q1 2025 Financial Results

Neutral

May 7, 2025

On May 7, 2025, MarketAxess Holdings announced its financial results for the first quarter of 2025, highlighting record trading volumes across various product areas despite a slight decline in total revenues compared to the previous year. The company reported a decrease in U.S. credit commission revenue, offset by growth in emerging markets and Eurobonds, and emphasized its strategic advancements in trading capabilities to enhance market share in U.S. credit.

Spark’s Take on MKTX Stock

According to Spark, TipRanks’ AI Analyst, MKTX is a Outperform.

Marketaxess Holdings receives a strong overall score of 77.6, backed by solid financial performance with robust revenue growth and effective cash flow management. Technical indicators suggest positive short-term momentum, although long-term resistance remains a concern. The valuation appears high, which could limit upside potential. The positive sentiment from the recent earnings call, highlighting record revenue and strategic growth initiatives, bolsters the company’s prospects despite market share challenges in certain segments.

To see Spark’s full report on MKTX stock, click here.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.