RBC Capital Markets analyst Peter Lenardos downgraded CBOE Holdings Inc. to "sector perform" from "outperform" but raised his price target to $108 from $100.
Lenardos believes the company's current price levels reflect its near-term update, although he continues to be impressed with the company's continued momentum in high-margin, proprietary trading volume. He also expects the company to see a "material amount" of synergy realization in the future given the company's staged integration plans.
The analyst noted that CBOE's proprietary product suite should see meaningful growth in the medium term from the expanded distribution network and geographical presence of the combined business of CBOE and Bats, which it purchased earlier in 2017. Additionally, CBOE is becoming more competitive with multiple listed options and seeing higher revenue from market data given the adoption of Bats' technology platform.
"Given CBOE's rapid integration and deleveraging, we have increased confidence in our forecasts for synergy realization above guidance and rapid deleveraging," Lenardos wrote.
Lenardos changed his full-year adjusted EPS estimates on the company to $3.38 from $3.37 for 2017, to $3.92 from $3.94 for 2018 and to $4.50 from $4.46 for 2019.