While it's early days, this seems to be an ideal week to own shares of bond trading platform operator MarketAxess Holdings (MKTX 0.10%). After the previous day's 5%-plus pop, the stock rose an additional 4% on Tuesday; by contrast on the latter day, the S&P 500 index dipped by 0.4%. Much of Tuesday's rise was due to an analyst move.
Citi raised its MarketAxess price target
Well before the market open on Tuesday, Citigroup's Chris Allen raised his price target on MarketAxess stock. Allen now feels that it is worth $300 per share, up from the previous level of $270. As the new target sits nearly 15% above the current market price, the prognosticator has maintained his buy recommendation.
It wasn't immediately clear why Allen elected to crank his MarketAxess price target higher. However, it hardly seems coincidental that the move came a day after the company published its regular monthly metrics release.
This showed notable growth in a host of key indicators across November, not least of which was total credit average daily trading volume (ADV); this ballooned by 9% on a year-over-year basis. Other indicators rose at double-digit rates.
Busy bonds
There has been lively trading in bonds lately because inflation data has been lower than expected. This raises the possibility of a hard brake on the Fed's recent series of interest rate hikes. In fact, it might even presage rate cuts if inflation continues to cool.
Likely in anticipation of lower rates, some investors are buying into current debt securities like bonds to lock in the higher payouts. This bump in trading benefits MarketAxess.
