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Goldman Sachs upgrades Cboe Global Markets, Virtu Financial to 'buy'

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Goldman Sachs upgrades Cboe Global Markets, Virtu Financial to 'buy'

Goldman Sachs analysts Alexander Blostein, Ryan Bailey, Sheriq Sumar, Daniel Jacoby and Aditya Sharma upgraded Cboe Global Markets Inc. and Virtu Financial Inc. to "buy" from "neutral."

The analysts said that Cboe Global Markets' SPX options are underappreciated amid increased demand for institutional hedging and higher share gains versus other similar products. For Virtu Financial, they expect cyclical recovery amid a late-cycle macroeconomic environment which will support higher EPS growth and could increase EPS accretion from its planned $1.0 billion purchase of Investment Technology Group Inc.

They also reiterated their "buy" rating for KKR & Co. and Intercontinental Exchange Inc. KKR's near-term cash earnings and book value growth will be challenged by the current macroeconomic environment, but the analysts think that the risks have already been reflected in the company's shares, which were 30% lower in the fourth quarter of 2018.

In reiterating their view on Intercontinental Exchange, they said that their EPS estimates, with a forecast of 10% growth through 2020, are already in line with market expectations.

Meanwhile, asset manager T. Rowe Price Group Inc. was downgraded to "neutral" due to higher EPS risks amid operating margins which are likely peaking and slower flows for 3-year excess returns.