Piper Sandler analyst increases price target on CBOE

Piper Sandler analyst increases price target on CBOE

Piper Sandler analyst Patrick Moley continued the Overweight rating on Cboe Global Markets, Inc. CBOE, increasing the price target to $174 from $160.

With one day left, the analyst expects CBOE to report its 5th consecutive record-breaking quarter for index options volumes and the 10th consecutive QoQ increase in volumes.

August & September are expected to be the two most vital volume months on record for SPX options, Moley notes.

The analyst notes that CBOE shares are up 3.1% since the former CEO resigned, contrasting with the decline of its average U.S. exchange peer and the S&P over the same period.

The analyst suspects the outperformance is a result of investors pricing in greater odds of a potential sale following the loss of its longtime CEO.

CBOE has been an attractive takeout candidate for investors for years, with their exclusive license to trade the popular SPX & VIX derivatives products. In 2021, media reported that CME Group Inc. CME approach CBOE with an offer, but CME denied the report.

If a sale were to occur, the analyst said, CME is the most likely acquirer.

The analysts raised EPS estimates for '23 / '24 from $7.10 / $7.31 to $7.21 / 7.55, respectively.

The value of the third quarter is up by $0.03 to $1.80 due to continued outperformance in proprietary derivatives volumes.

CBOE shares are down 0.32% to $155.90 on Friday, down 0.32% from the previous close of $155.90.