Piper Sandler analyst increases price target on CBOE

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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.