Tradeweb Shares Rise About 3% on Record Daily Trading Volume for March

Tradeweb, the leading fixed income, derivatives and ETF electronic trading platform, said on Tuesday that its average daily volume for the month of March increased 7.3% year-on-year to $1.07 trillion with a total trading volume of $24.7 trillion.

Following this, Tradeweb shares, which surged about 35% in 2020, rose about 3% to $78.99 on Tuesday.

For the first quarter of 2021, the company said its total trading volume was at a record $65.1 trillion and ADV was a record $1.06 trillion, an increase of 18.0% YoY, with preliminary average variable fees per million dollars of volume traded of $2.77.

Analyst Comments

“Tradeweb (TW) reported monthly volumes this morning that showed 7% y/y growth in March against tough comps, and 18% growth y/y for 1Q that’s 5% ahead of consensus and 1% below MSe. 1Q capture rate far better than expectations leading to 11c EPS upside to consensus and 7c upside to MSe. Overweight,” noted Michael Cyprys, equity analyst at Morgan Stanley.

Tradeweb Stock Price Forecast

Nine analysts who offered stock ratings for Tradeweb in the last three months forecast the average price in 12 months of $75.29 with a high forecast of $90.00 and a low forecast of $64.00.

The average price target represents a -4.71% decrease from the last price of $79.01. Of those nine analysts, six rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $90 with a high of $150 under a bull scenario and $43 under the worst-case scenario. The firm gave an “Overweight” rating on the financial services company’s stock.

“Attractive play on the electronification of fixed income markets globally, a secular theme that alongside a cyclical rebound in rates volumes can drive faster growth than consensus expectations. We think TW can achieve 11% revenue CAGR over the next 5-years as volumes shift from analog to digital with underpenetrated rate swaps and institutional rates, as well as credit that’s still early days but TW has significant momentum,” Morgan Stanley’s Cyprys added.

“Margin expansion from scaling can help drive 14% EBITDA CAGR. A clearer grasp of the story and upside EPS revisions can shrink its valuation discount to MKTX. Attractive bull/bear skew.”

Several other analysts have also updated their stock outlook. Credit Suisse raised the target price to $81 from $68. Rosenblatt Securities upped the target price to $75 from $73. Piper Sandler lifted the target price to $73 from $64. Citigroup increased the price target to $69 from $65. UBS raised the target price to $75 from $73. Deutsche Bank upped the target price to $65 from $64.

Upside and Downside Risks

Risks to Upside: 1) Market share gains in credit accelerate. 2) Higher secondary market turnover leads to a faster avg. daily volume (ADV) growth and cyclical uplift further boosts rates. 3) Faster pace of electronic penetration. 4) Data monetization opportunity accelerates-highlighted by Morgan Stanley.

Risks to Downside: 1) Increased competition and fee compression. 2) Cyclical slowdown in rates trading products. 3) Slower pace of electronic adoption. 4) Margin fails to expand further.

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