AP News

MarketAxess sinks after Credit Suisse downgrade


NEW YORK (AP) — A day after stock in the electronic trading platform MarketAxess jumped, a Credit Suisse analyst warned that the company's share price looks too steep.

Howard Chen, who leads Credit Suisse's brokerage analysts, cut his rating on MarketAxess to "Underperform" from "Neutral" on Wednesday. Chen said it's hard to see where the trading platform will find new sources of revenue to justify the higher stock price.

"The next leg of growth is not easy for us to see," he wrote.

New York-based MarketAxess fell nearly 4 percent in late Wednesday trading, losing $1.29 to $31.09 on heavy volume, as the broader markets declined.

The stock leaped 5 percent Tuesday following news that the company will be added to the S&P SmallCap 600 index. Stocks frequently rally after they're added to indices, because the mutual funds and other investment vehicles that track those indices have to add shares to their portfolios.

Chen argued that at the stock's current price, it appears investors have already accounted for the company's earnings, as well as the possibility it could be bought by another firm. For instance, MarketAxess trades at 22 times Chen's estimate for 2013 earnings. That's 37 percent higher than "the best-in-class U.S. exchanges" covered by Credit Suisse, such as the CME Group and the IntercontinentalExchange Inc., Chen wrote.

Credit Suisse's target price for the stock is $28.

MarketAxess Holdings Inc. has gained 3.7 percent in 2012, versus 14 percent for the Standard & Poor's 500 index, a benchmark for the overall stock market. Over the past 12 months, it has traded as high as $24.57 and as low as $37.79.


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