MarketAxess Earnings: Solid Trading Volume Supports Growth, but Market Share Is Still a Concern

Wide-moat-rated MarketAxess reported decent second-quarter earnings that were largely in line with our expectations, though weak high-yield trading volume remained a headwind. Net revenue increased 10% to $197.7 million, though this incluces $7.9 million from its acquisition of Pragma. Earnings per share increased to $1.72 from $1.59 last year. As we incorporate these results, we do not expect to materially alter our $300 fair value estimate. We see the shares as undervalued at the current price. That said, we caution investors that due to ongoing market share concerns, we expect the shares to remain highly sensitive to the firm’s monthly trading volume releases.