KBW Upgrades CME Group to Outperform Amid Overblown Fears
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: seekingalpha
- Rating Upgrade: Keefe, Bruyette & Woods upgraded CME Group from Market Perform to Outperform, as analyst Chris Allen noted that fears regarding new perpetual futures products eroding its business appear overblown, indicating a renewed confidence in CME's market position.
- Market Positioning: With 85%-90% of CME's business coming from institutional clients and perpetual futures primarily targeting retail markets, this structure allows CME to maintain a relatively stable business foundation against the backdrop of high leverage in overseas markets, thereby mitigating potential risks.
- Volume Growth: CME's June average daily volume reached 31.1 million, representing a 21% year-over-year increase, while open interest rose 13% year-over-year, suggesting a healthy volume trajectory in the coming months and bolstering investor confidence.
- Market Reaction: Although CME stock rose 0.2% in Thursday morning trading, KBW's Outperform rating contrasts with SA Quant's Hold rating, reflecting differing views among investors regarding CME's future performance and highlighting market sentiment divergence.
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Analyst Views on CME
Wall Street analysts forecast CME stock price to rise
10 Analyst Rating
4 Buy
4 Hold
2 Sell
Hold
Current: 252.540
Low
209.00
Averages
285.90
High
320.00
Current: 252.540
Low
209.00
Averages
285.90
High
320.00
About CME
CME Group Inc. provides a derivatives marketplace. The Company enables clients to trade futures, options, cash and over the counter (OTC) markets, optimize portfolios, and analyze data. It exchanges offer a range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange (FX), energy, agricultural products and metals. It offers futures and options on futures trading through the CME Globex platform, fixed income trading via BrokerTec and FX trading on the EBS platform. In addition, it operates central counterparty clearing provider, CME Clearing. Its products provide a means for hedging, speculation and asset allocation related to the risks associated with, among other things, interest rate sensitive instruments, and changes in the prices of agricultural, energy and metal commodities. It provides clearing and settlement services for a range of exchange-traded futures and options on futures contracts and OTC derivatives.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
CFTC Chair Defends Approval of Perpetual Futures Contracts
- Regulatory Support: CFTC Chair Michael Selig emphasized on CNBC that approving futures contracts with no expiration date is crucial for ensuring the safety of U.S. markets, aiming to bring internationally developed products onshore under strict regulations.
- Strong Market Demand: Following the launch of bitcoin perpetual futures, Kalshi reported over $3 billion in notional volume within just a week, indicating robust market demand for this innovative contract type, which could lead to further financial product innovations.
- Leverage Risk Discussion: Despite concerns from CME Group CEO regarding the high leverage risks associated with perpetual futures, Selig argued that proper disclosures and broker evaluations will ensure trading safety, countering the notion of excessive regulatory paternalism.
- Political Pressure Denial: Selig firmly denied that the CFTC's approval of perpetual futures was influenced by political pressure from the Trump administration, asserting that such insinuations are baseless and highlighting the independence and professionalism of regulatory decisions.
See More
KBW Upgrades CME Group to Outperform Amid Overblown Fears
- Rating Upgrade: Keefe, Bruyette & Woods upgraded CME Group from Market Perform to Outperform, as analyst Chris Allen noted that fears regarding new perpetual futures products eroding its business appear overblown, indicating a renewed confidence in CME's market position.
- Market Positioning: With 85%-90% of CME's business coming from institutional clients and perpetual futures primarily targeting retail markets, this structure allows CME to maintain a relatively stable business foundation against the backdrop of high leverage in overseas markets, thereby mitigating potential risks.
- Volume Growth: CME's June average daily volume reached 31.1 million, representing a 21% year-over-year increase, while open interest rose 13% year-over-year, suggesting a healthy volume trajectory in the coming months and bolstering investor confidence.
- Market Reaction: Although CME stock rose 0.2% in Thursday morning trading, KBW's Outperform rating contrasts with SA Quant's Hold rating, reflecting differing views among investors regarding CME's future performance and highlighting market sentiment divergence.
See More
Latest Wall Street Rating Updates
- Apple Rating Reaffirmed: Bank of America reiterates Apple as a buy, believing that price increases are already reflected in the stock, anticipating that rising memory costs will force Apple to raise prices, impacting future earnings performance.
- Nice Upgrade: DA Davidson upgrades Nice from neutral to buy, maintaining a $110 price target, arguing that concerns about AI disruption are overblown, suggesting a more optimistic outlook that could boost the company's stock price.
- Immix Biopharma Initiation: Bank of America initiates coverage of Immix Biopharma with a buy rating and a $27 price target, citing the company's differentiated product offerings as a significant growth driver.
- Salesforce Upgrade: Monness Crespi Hardt upgrades Salesforce from neutral to buy with a $200 price target, based on its depressed valuation, strong cash flow generation, and support for customer transformation, which are expected to drive stock price increases.
See More
CME Group Stock Poised for Rebound Amid Regulatory Battle
- Rating Upgrade: Keefe, Bruyette & Woods upgraded CME Group's rating from 'Market Perform' to 'Outperform' while maintaining a $305 price target, indicating a potential 21% upside from Wednesday's close, reflecting analysts' confidence in the company's future performance.
- Market Pressure Analysis: Analyst Chris Allen noted that the recent stock price decline is primarily due to excessive market concerns over perpetual futures risks, while CME's low retail exposure and index licenses in equity products suggest that these risks are overblown, presenting a buying opportunity for investors at current low prices.
- Legal Action Plan: CME Group plans to sue the Commodity Futures Trading Commission over its approval of perpetual futures contracts, with CEO Terry Duffy emphasizing that this action is not personal but a legal necessity, demonstrating the company's firm stance in the face of regulatory challenges.
- Analyst Consensus: According to LSEG data, 8 out of 17 analysts covering CME Group have rated the stock as 'Buy' or 'Strong Buy', reflecting a generally positive outlook on the company despite its nearly 8% decline year-to-date.
See More
Iran Peace Deal Framework Drives Oil Prices Down
- Oil Price Volatility: Following the announcement of a framework for a long-term peace deal between Iran and the U.S., oil prices have dropped 30% from their nearly $113 peak on April 7, indicating market optimism about future supply, which could further impact global energy market stability.
- Positive Market Reaction: The Dow Jones Industrial Average surged above 52,000 for the first time, although it later retreated, reflecting investor expectations surrounding the peace deal, which may boost related energy stocks and enhance market confidence.
- Supply Chain Recovery: JPMorgan reports that oil flows through the Strait of Hormuz increased from 2.9 million barrels per day in May to 5.1 million barrels per day in June, although still at only 25% of pre-war levels, this recovery speed could accelerate global market supply and subsequently affect oil prices.
- Gasoline Price Decrease: The national average gasoline price is expected to fall below $3.50 per gallon within two weeks, with 11 states already below $3.65, providing tangible benefits to consumers and reflecting the positive economic impact of declining oil prices.
See More
US Stocks Plunge as Tech Sector Weighs Down Market
- Market Weakness: On Wednesday, the S&P 500 Index fell by 1.21%, the Dow Jones Industrial Average dropped by 0.98%, and the Nasdaq 100 Index declined by 0.99%, reflecting market concerns over potential interest rate hikes by the Fed, particularly amid weak performance in technology stocks.
- Economic Data Support: Despite the market downturn, US May retail sales rose by 0.9% month-over-month, surpassing expectations of 0.6%, indicating resilient consumer demand, while pending home sales increased by 3.8% month-over-month, marking the largest gain in 20 months, potentially providing some support to the market.
- Fed Policy Outlook: The Fed maintained interest rates at its meeting on Wednesday but indicated through its dot plot that at least one more 25 basis point hike is expected this year, with the 2026 year-end federal funds rate projection raised to 3.75%, reflecting a cautious outlook on future economic conditions.
- International Market Response: While US stocks declined, overseas markets performed strongly, with the Euro Stoxx 50 reaching a new record high and closing up 0.68%, demonstrating global investor confidence in economic recovery, which may contrast with the US market's performance.
See More
CFTC Chair Defends Approval of Perpetual Futures Contracts
- Regulatory Support: CFTC Chair Michael Selig emphasized on CNBC that approving futures contracts with no expiration date is crucial for ensuring the safety of U.S. markets, aiming to bring internationally developed products onshore under strict regulations.
- Strong Market Demand: Following the launch of bitcoin perpetual futures, Kalshi reported over $3 billion in notional volume within just a week, indicating robust market demand for this innovative contract type, which could lead to further financial product innovations.
- Leverage Risk Discussion: Despite concerns from CME Group CEO regarding the high leverage risks associated with perpetual futures, Selig argued that proper disclosures and broker evaluations will ensure trading safety, countering the notion of excessive regulatory paternalism.
- Political Pressure Denial: Selig firmly denied that the CFTC's approval of perpetual futures was influenced by political pressure from the Trump administration, asserting that such insinuations are baseless and highlighting the independence and professionalism of regulatory decisions.
See More
KBW Upgrades CME Group to Outperform Amid Overblown Fears
- Rating Upgrade: Keefe, Bruyette & Woods upgraded CME Group from Market Perform to Outperform, as analyst Chris Allen noted that fears regarding new perpetual futures products eroding its business appear overblown, indicating a renewed confidence in CME's market position.
- Market Positioning: With 85%-90% of CME's business coming from institutional clients and perpetual futures primarily targeting retail markets, this structure allows CME to maintain a relatively stable business foundation against the backdrop of high leverage in overseas markets, thereby mitigating potential risks.
- Volume Growth: CME's June average daily volume reached 31.1 million, representing a 21% year-over-year increase, while open interest rose 13% year-over-year, suggesting a healthy volume trajectory in the coming months and bolstering investor confidence.
- Market Reaction: Although CME stock rose 0.2% in Thursday morning trading, KBW's Outperform rating contrasts with SA Quant's Hold rating, reflecting differing views among investors regarding CME's future performance and highlighting market sentiment divergence.
See More
Latest Wall Street Rating Updates
- Apple Rating Reaffirmed: Bank of America reiterates Apple as a buy, believing that price increases are already reflected in the stock, anticipating that rising memory costs will force Apple to raise prices, impacting future earnings performance.
- Nice Upgrade: DA Davidson upgrades Nice from neutral to buy, maintaining a $110 price target, arguing that concerns about AI disruption are overblown, suggesting a more optimistic outlook that could boost the company's stock price.
- Immix Biopharma Initiation: Bank of America initiates coverage of Immix Biopharma with a buy rating and a $27 price target, citing the company's differentiated product offerings as a significant growth driver.
- Salesforce Upgrade: Monness Crespi Hardt upgrades Salesforce from neutral to buy with a $200 price target, based on its depressed valuation, strong cash flow generation, and support for customer transformation, which are expected to drive stock price increases.
See More
CME Group Stock Poised for Rebound Amid Regulatory Battle
- Rating Upgrade: Keefe, Bruyette & Woods upgraded CME Group's rating from 'Market Perform' to 'Outperform' while maintaining a $305 price target, indicating a potential 21% upside from Wednesday's close, reflecting analysts' confidence in the company's future performance.
- Market Pressure Analysis: Analyst Chris Allen noted that the recent stock price decline is primarily due to excessive market concerns over perpetual futures risks, while CME's low retail exposure and index licenses in equity products suggest that these risks are overblown, presenting a buying opportunity for investors at current low prices.
- Legal Action Plan: CME Group plans to sue the Commodity Futures Trading Commission over its approval of perpetual futures contracts, with CEO Terry Duffy emphasizing that this action is not personal but a legal necessity, demonstrating the company's firm stance in the face of regulatory challenges.
- Analyst Consensus: According to LSEG data, 8 out of 17 analysts covering CME Group have rated the stock as 'Buy' or 'Strong Buy', reflecting a generally positive outlook on the company despite its nearly 8% decline year-to-date.
See More
Iran Peace Deal Framework Drives Oil Prices Down
- Oil Price Volatility: Following the announcement of a framework for a long-term peace deal between Iran and the U.S., oil prices have dropped 30% from their nearly $113 peak on April 7, indicating market optimism about future supply, which could further impact global energy market stability.
- Positive Market Reaction: The Dow Jones Industrial Average surged above 52,000 for the first time, although it later retreated, reflecting investor expectations surrounding the peace deal, which may boost related energy stocks and enhance market confidence.
- Supply Chain Recovery: JPMorgan reports that oil flows through the Strait of Hormuz increased from 2.9 million barrels per day in May to 5.1 million barrels per day in June, although still at only 25% of pre-war levels, this recovery speed could accelerate global market supply and subsequently affect oil prices.
- Gasoline Price Decrease: The national average gasoline price is expected to fall below $3.50 per gallon within two weeks, with 11 states already below $3.65, providing tangible benefits to consumers and reflecting the positive economic impact of declining oil prices.
See More
US Stocks Plunge as Tech Sector Weighs Down Market
- Market Weakness: On Wednesday, the S&P 500 Index fell by 1.21%, the Dow Jones Industrial Average dropped by 0.98%, and the Nasdaq 100 Index declined by 0.99%, reflecting market concerns over potential interest rate hikes by the Fed, particularly amid weak performance in technology stocks.
- Economic Data Support: Despite the market downturn, US May retail sales rose by 0.9% month-over-month, surpassing expectations of 0.6%, indicating resilient consumer demand, while pending home sales increased by 3.8% month-over-month, marking the largest gain in 20 months, potentially providing some support to the market.
- Fed Policy Outlook: The Fed maintained interest rates at its meeting on Wednesday but indicated through its dot plot that at least one more 25 basis point hike is expected this year, with the 2026 year-end federal funds rate projection raised to 3.75%, reflecting a cautious outlook on future economic conditions.
- International Market Response: While US stocks declined, overseas markets performed strongly, with the Euro Stoxx 50 reaching a new record high and closing up 0.68%, demonstrating global investor confidence in economic recovery, which may contrast with the US market's performance.
See More
