UPDATE: Goldman Sachs Upgrades Tradeweb Markets (TW) to Buy
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Goldman Sachs analyst Alexander Blostein upgraded Tradeweb Markets (NASDAQ: TW) from Neutral to Buy with a price target of $85.00 (from $71.00).
THe analyst comments "TW’s Rates complex is the firm’s largest revenue contributor at 53% of total revenues in 2020, with Interest Rate Swaps (>1 year) and US Cash Treasuries being the two most material revenue contributors to the firm’s variable rates business. After several robust years, TW’s Rates revenue growth dropped to ~6% in 2020 (excluding volatile 1Q20) as volume growth in Cash products has slowed and Derivatives volumes flat-lined. Notably, this dynamic was largely a function of lower industry volumes, as TW continued to gain market share within these products. That said, with signs of a cyclical recovery in Rates volumes, we see the firm’s revenue growth re-accelerating into 10%+ range boosted by (1) improving outlook for Cash Treasuries amid record Coupon issuance, (2) a boost to Interest Rates Swap volumes from rising long-term rates, and (3) favorable revenue capture dynamics within Cash amid higher Coupon volumes within Treasuries and growth in the firm’s Specified Pool of mortgage business."
Shares of Tradeweb Markets closed at $69.30 yesterday.
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