TD Cowen raises CBOE Global Markets target price to $249 from $226

TD Cowen raises CBOE Global Markets target price to $249 from $226

TD Cowen has raised its price target on CBOE Global Markets (CBOE) to $249 from $226, according to a recent analyst report. The move comes after the company's strong second-quarter 2025 results, which demonstrated robust financial performance and strategic initiatives.

CBOE's second-quarter 2025 results highlighted its ability to navigate a fragmented financial ecosystem. The company reported net revenue of $587.3 million, a 14% year-over-year increase, driven by growth in its derivatives trading, data monetization, and global expansion segments. The company's strategic decision to wind down its Japanese equities business, despite its minimal impact on 2025 guidance, signals a commitment to leaner and more profitable operations.

The company's financial health is further underscored by its adjusted diluted EPS of $2.46, a 14% increase, driven by a one-time impairment reversal in 2024. Operating income surged 61% to $339.1 million, with a 57.7% margin, indicating strong operational efficiency. The Options segment, which delivered a 19% revenue spike, is a key driver of this growth, with average daily volume (ADV) increasing by 20%.

CBOE's strategic focus on its Data Vantage segment, which is growing at 11% year-over-year, is another significant factor in its success. This segment taps into a $200+ billion global market data industry, providing traders with faster and more granular insights. The company's commitment to innovation is evident in its multi-listed and index options, which saw a 22% and 17% increase in ADV, respectively.

The company's long-term growth prospects are bolstered by the increasing demand for volatility products from institutional investors and the growing retail trading participation in the derivatives market. Retail trading participation has become a $1.2 trillion market, with options trading accounting for 40% of all derivatives activity.

TD Cowen's new price target of $249 reflects its confidence in CBOE's ability to sustain and outpace its growth. The stock is currently trading at a forward P/E of 22x, well below its 5-year average of 28x, offering a compelling margin of safety for investors. The firm's guidance for high single-digit organic revenue growth and mid-to-high single-digit Data Vantage expansion is viewed as conservative rather than complacent.

Investors are advised to watch for catalysts such as the full-year cost-cutting tailwinds and Japan exit savings, which could further lift margins. A sustained 20%+ ADV growth in options would justify a re-rating to 25x+ earnings.

In conclusion, TD Cowen's revised price target reflects CBOE's strong financial performance, strategic initiatives, and robust growth prospects. The company's focus on data, derivatives trading, and global expansion positions it well to capitalize on the evolving financial ecosystem.

References:
[1] https://uk.investing.com/news/analyst-ratings/booking-holdings-stock-price-target-raised-to-6850-by-td-cowen-on-margin-upside-93CH-4191849
[2] https://www.ainvest.com/news/cboe-global-markets-cboe-high-conviction-play-evolving-derivatives-data-ecosystem-2508/
[3] https://www.investing.com/news/analyst-ratings/woodward-stock-price-target-raised-to-290-from-260-at-td-cowen-93CH-4157839