MarketAxess Holdings Inc. (MKTX Quick QuoteMKTX - Free Report) is set to report third-quarter 2024 results on Nov. 6, 2024, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $1.82 per share on revenues of $205.48 million.

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The third-quarter earnings estimate has witnessed upward revisions over the past 60 days. The bottom-line projection indicates a year-over-year increase of 24.7%. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 19.3%.

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For the current year, the Zacks Consensus Estimate for MarketAxess’ revenues is pegged at $824.89 billion, implying a growth of 9.6% year over year. Also, the consensus mark for current year EPS is pegged at $7.26, implying a jump of around 6% on a year-over-year basis.

MarketAxessbeat the consensus estimate for earnings in three of the last four quarters and missed once, with the average surprise being 2.6%.

Q3 Earnings Whispers for MKTX

Our proven model predicts a likely earnings beat for the company this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That’s precisely the case here.

MarketAxess has an Earnings ESP of +1.62% and a Zacks Rank #2.

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What’s Shaping MKTX’s Q3 Results?

Higher trading volumes and strong estimated market share gains across most of its credit product lines are likely to have boosted credit commission revenues in the third quarter. The Zacks Consensus Estimate for the total trading volume indicates a 29.8% year-over-year increase.

Solid trading volumes in the international business of MarketAxess are expected to have driven the company’s overall commissions in the third quarter. The consensus mark for Eurobonds trading volumes indicates 26.8% growth from a year ago, while our model estimate suggests a 21.4% increase. The Zacks Consensus Estimate for commissions is pegged at $178.7 million, indicating 18.8% growth from the prior-year quarter’s reported number.

Increased utilization of its data product suite and new contracts are likely to have provided an impetus to MarketAxess’ information services revenues in the to-be-reported quarter. The consensus mark for third-quarter information services revenues is pinned at $12.8 million, which implies an 8.7% rise from the year-ago quarter’s reported figure.

The company earlier stated impressive growth in its trading volumes for the third quarter, with total credit ADV reaching nearly $14.1 billion, marking a more than 26.5% year-over-year increase. A 35.7% rise in U.S. high-grade ADV, a 19.1% boost in emerging markets ADV and 27.4% growth in Eurobonds ADV aided the figure.

These are likely to have positioned the company for not only a year-over-year increase but also an earnings beat. However, the upside is likely to have been partly offset by continued decline in the high-yield market. The U.S. high-yield trading saw a 1.1% decline on the platform for the third quarter. Its estimated market share decreased 310 basis points compared with the previous year. Also, we forecast total expenses to be around $120 million in the third quarter, indicating an increase of 13.7% year over year.

MKTX’s Price Performance & Valuation

MarketAxess' stock has rallied 39.6% in the past six months, outperforming the industry’s growth of 15.2% and the S&P 500 Index’s 10.5% gain. Among its peers, Intercontinental Exchange, Inc. (ICE Quick QuoteICE - Free Report) has increased 17.7%, while Cboe Global Markets, Inc. (CBOE Quick QuoteCBOE - Free Report) has gained 14.8% during the same period.

MKTX’s Six-Month Price Performance

Image Source: Zacks Investment Research

Now, let’s look at the value MarketAxess offers investors at current levels.

Currently, MKTX is trading at 35.85X forward 12-month earnings, above the industry’s average of 23.17X, indicating investor confidence. Also, the stock is trading below its five-year median of 44.95X, signaling further growth potential.

Image Source: Zacks Investment Research

How Should You Play MKTX Pre-Q3 Earnings?

Enhanced trading velocity, facilitated by increased trading automation and the All-to-All Open Trading platform, is expected to contribute to its sustained revenue growth. The Open Trading platform generates substantial transaction cost savings.

Acquisitions and alliances are enhancing its market presence and offering. Some partnerships with major entities, including BlackRock, S&P Dow Jones Indices, China Foreign Exchange Trade System, Tradeweb Markets, Bloomberg and S&P Global Market Intelligence, will continue to expand its technology solutions and product portfolio.

Thanks to these initiatives, the company is expected to witness sustained growth in its trading volumes. With this momentum, shareholder value-enhancing activities, strong liquidity and potential for another earnings beat, current shareholders might consider holding. Prospective investors could see a buying opportunity and watch upcoming earnings for further insights.