William Blair analysts initiated coverage on Cboe Holdings (NYSE:CBOE) with a Market Perform rating, citing steady growth potential supported by its leading position in the derivatives and securities exchange markets. The company is expected to achieve medium-term top-line growth of 5%-7%, driven by its derivatives and data businesses.
Cboe’s strategic initiatives are positioned to maintain margin stability, enhance capital returns, and sustain organic growth as it shifts focus away from mergers and acquisitions. These efforts are projected to result in mid- to high single-digit earnings per share growth through 2025 and 2026.
The company’s derivatives segment, which constitutes 53% of its revenue mix, serves as a key growth driver. Offering a comprehensive portfolio of proprietary products, many on an exclusive basis, Cboe benefits from a strong competitive moat. According to the analysts, the derivatives business is bolstered by secular tailwinds, including increased globalization, growing retail participation, and broader adoption of options trading. Additionally, its quasi-recurring revenue model further strengthens its growth potential.