CME stock rallies after BofA says buy, citing improving revenue backdrop and attractive yield

Shares of CME Group Inc. rallied 2.3% in afternoon trading Wednesday, after BofA Securities analyst Michael Carrier said it’s time to buy the derivatives marketplace, given his upbeat outlook for revenue and an attractive yield. Carrier raised his rating to buy from neutral, while lifting his stock price target to $220 from $200. “We see an improving revenue backdrop as we get past a 1H20 tough volume [comparisons], the economy rebounds and interest rate expectations are on the rise, and as rates head higher, volatility and volumes across asset classes will likely be elevated as well,” Carrier wrote in a note to clients. He said if the interest rate and inflation backdrop continue to rise, then he could see revenue growth and earnings-per-share growth “comfortably” in the double-digit percentage range, and a dividend yield running into the 4% range from the current 3.5% expectation. The stock has rallied 14.6% over the past three months, while the SPDR Financial Select Sector ETF has run up 16.0% and the S&P 500 has advanced 6.0%.

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