MarketAxess plunges 81% to decade low as earnings loom

MarketAxess Holdings Inc. shares fell to $114.24, an 81% decline from their record high, ahead of second-quarter earnings.

"The stock is pricing in a worst-case scenario that doesn't match the underlying business performance," analysts at Piper Sandler said, maintaining a $128 price target.

The electronic bond-trading platform operator's market capitalization has fallen to about $4 billion from more than $21 billion at its peak. Revenue rose 12% to $233 million in the first quarter, with non-US credit trading jumping 20%. Analysts expect Q2 revenue of $216 million, down 1.26% from a year earlier, and EPS of $1.86, compared with $2.00.

The stock's forward P/E of 14.3 is less than half its five-year average of 35, suggesting the market has priced in a prolonged slowdown. A better-than-expected earnings report could trigger a rebound from deeply oversold levels, with the Relative Strength Index at 28.2.

MarketAxess has a history of beating analyst estimates, which raises the possibility that actual results could exceed the consensus forecast. The company's net income margin expanded to 33.5% in the first quarter from 7.2% a year earlier, reflecting improved operating leverage even as top-line growth moderated.

Wall Street analysts still see meaningful upside from current levels. Morgan Stanley has a $129 target, Barclays expects $132, and UBS is the most bullish at $200. The average analyst target of about $147 implies roughly 29% upside from Monday's close.

The decline puts the stock at its lowest since 2014, testing support levels not seen in more than a decade. Investors will watch the Q2 earnings report, expected in the coming days, for signs that the fixed-income trading platform's growth trajectory is stabilizing.

This article is for informational purposes only and does not constitute investment advice.