Shares of CBOE Holdings Inc. slumped 1.7% in midday trade Thursday, after Bank of America Merrill Lynch turned bearish on the options trading exchange, citing weaker volume trends, increasing competition and a what is believed to be peak valuation. Analyst Michael Carrier cut his rating to underperform, after being at neutral since February 2015. He cut his stock price target to $65, which is more than 3% below current levels, from $69. Carrier said CBOE faces “intense competition” in the multi-listed options market, with 14 exchanges competing for share. From 2008 through 2015, he said CBOE’s revenue fell 66%, market share has declined 19% and pricing has dropped 48%. He wrote in a research note this trend could worsen, as he said he thinks “it will be tougher to offset as skillfully as the team as done over the past few years.” Instead of CBOE, Carrier recommends Intercontinental Exchange Inc. , which he rates a buy; the stock is up 0.5% Thursday. CBOE’s stock has tacked on 3.4% year to date, while the S&P 500 has gained 7%.
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