Despite some recent success of CME Group Inc (CME) shares, Compass Point analysts view them as fairly valued and as such initiated coverage on the world’s largest derivatives exchange at “Neutral.”
The analysts value shares of CME at $55. This target is a +4% upside to Tuesday’s closing price of $52.90.
Compass Point commented, “CME Group is the world’s leading and most diverse derivatives marketplace. The business produces healthy margins that rank near the top of the S&P 500. Free cash flow is significant and has increased meaningfully from $128 million in 2003 to $1,174 million in 2011. Specific future growth drivers include globalization, the convergence of OTC and exchange-traded markets, and co-location services. However, competition from ICE is building and today’s volume environment is tepid. Trading at 17x our estimate of FY’13 EPS with a projected 5.2% dividend yield, we consider the shares fairly valued.”
CME Group shares were flat during premarket trading on Wednesday. The stock is up +13.18% over the past year.
The Bottom Line
Shares of CME Group (CME) have a 3.40% dividend yield, based on last night’s closing stock price of $52.90. The stock has technical support in the $48-$50 price area. If the shares can firm up, we see overhead resistance around the $56-$57 price levels.
CME Group Inc (CME) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.