William Blair Reiterates Outperform Rating on StoneX Group Inc. (SNEX): "current price looks highly attractive"

William Blair analyst Jeff Schmitt reiterated an Outperform rating on StoneX Group Inc. (NASDAQ: SNEX)

The analyst commented, "Since the Iranian engagement began on February 28, the stock is down nearly 20% from an all-time high of $131. We believe the pullback is due to investor concerns that geopolitical risks could reduce client trading activity, increase counterparty risk, and cause a dislocation in commodities markets for an extended period. While the company is typically a beneficiary of volatility, this can cut both ways. Commodity volatility normally boosts trading volumes, but severe dislocations can stress its clearing and financing operations, although this is rare. At present, energy volatility has spiked, while volatility for agricultural commodities has stayed in check. This could change quickly though if oil prices move higher and agricultural shipping and freight transit are disrupted. At this point, we believe current conditions are more likely to be a tailwind to results. Our view could shift if there is a more severe spike in energy prices with no clear path for them to come down. In addition, if interest rates stay "higher for longer" due to inflation concerns, the company would also benefit given that it generates a significant amount of interest income and fees from client cash and collateral (roughly 15% of net revenues and 45%-50% of earnings), all of which is exposed to the short end of the curve. Each 25-basis-point change in the fed funds rate affects EPS by $0.20, and we currently assume two additional rate cuts by June in our projections. If geopolitical tensions persist, there is likely to be additional downside to the stock in the near term. While we believe the current price looks highly attractive, we would not be surprised if it fell to around $90-$95 near term (its 200-day moving average is $98)."

For an analyst ratings summary and ratings history on StoneX Group Inc. click here. For more ratings news on StoneX Group Inc. click here.

Shares of StoneX Group Inc. closed at $108.06 yesterday.

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