Cboe Global Markets, Inc. CBOE has been trading above its 50-day simple moving average (SMA), signaling a short-term bullish trend. As of April 4, 2025, its share price was $215.09, down 8.2% from its 52-week high of $234.37.

The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of an uptrend or downtrend.

CBOE’s strategy of expanding its product line across asset classes, broadening geographic reach and diversifying the business mix reflects operational expertise, which, in turn, poises it well for growth.  CBOE is the largest stock exchange operator by volume in the United States and a leading market globally for ETP trading.

CBOE Price Movement vs. 50-Day Moving Average

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CBOE: An Outperformer

CBOE has gained 10.1% year to date, outperforming the industry, the sector as well and the Zacks S&P 500 composite’s return in the same time frame.

CBOE vs Industry, Sector & S&P 500 YTD

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CBOE Shares Are Expensive

CBOE shares are trading at a premium to the industry. Its price-to-earnings of 23.38X is higher than the industry average of 22.53X.

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Shares of other players like Intercontinental Exchange, Inc. ICE, MarketAxess Holdings Inc. MKTX and CME Group CME are also trading at a multiple higher than the industry.

Average Target Price Reflects a Downside

Based on short-term price targets offered by 16 analysts, the Zacks average price target is $210.44 per share. The average indicates a potential 2.2% downside from the last closing price.

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Optimistic Growth Projections for CBOE

The Zacks Consensus Estimate for 2025 earnings is pegged at $9.02, indicating a 4.8% year-over-year increase on 5.1% higher revenues of $2.2 billion. The consensus estimate for 2026 is pegged at $9.70, indicating a 7.6% year-over-year increase on 5.4% higher revenues of $2.3 billion. The expected long-term earnings growth rate is 14.7%, better than the industry’s 9.7%.

Optimistic Analyst Sentiment Instills Confidence

The Zacks Consensus Estimate for 2025 and 2026 earnings has moved 0.6% and 0.4% north, respectively, in the last seven days.

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CBOE’s Favorable Return on Capital

Return on equity, which reflects the company’s efficiency in utilizing shareholders' funds, was 22% in the trailing 12 months, better than the industry average of 13.5%. CBOE’s return on equity has been improving since 2019.
 

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Return on invested capital (ROIC) has remained around 10% over the past few years. The company has raised its capital investment significantly, reflecting its efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 11.5%, higher than the industry average of 5%.

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CBOE’s Growth Path

Cboe Global’s organic strength lies in a diversified business mix that ensures uninterrupted revenue generation and recurring non-transaction revenues.  CBOE Global remains on track to grow its recurring non-transaction revenues. Data Vantage organic net revenue growth is expected to be in the mid to high single-digit range in 2025.

Organic growth remained a key strength at Cboe Global Markets, as reflected in its revenue growth story. Increasing transaction fees on the back of trading volume growth should continue to aid.

Cboe Global Markets boasts a compelling inorganic growth story, given its prudent acquisitions.  With nearly all of its acquisitions fully integrated, Cboe Global remains well-poised to unlock the incremental value from the global network by investing in organic growth initiatives in all businesses while enhancing and leveraging the global technology platform.

CBOE achieved a greater global breadth of services and products, as well as new distribution channels, apart from generating revenues and cost synergies through strategic buyouts.

Banking on operational expertise, the company has been strengthening its balance sheet by improving its cash position and lowering its debt balance.  Its leverage ratio, as well as times interest earned, compares favorably with the industry average. CBOE’s strategic investments are well supported by solid capital management.

However, higher expenses remain a major concern.  For 2025, CBOE expects adjusted expenses in the range of $837-$852 million, a 4.8% increase on the lower end and a 6.7% rise on the higher end.

Cboe Global has been facing intense competition due to increased market consolidation, which tends to reduce market share, including product and price competition.

Investments in European, Canadian and Asia Pacific operations remain exposed to volatility in currency exchange rates through translation of net assets or equity to U.S. dollars.  

How Should You Play CBOE Stock Now?

Cboe Global’s growth strategy of expanding its product line across asset classes, broadening geographic reach, diversifying the business mix with recurring revenues and leveraging technology reflects its operational expertise.

Its wealth distribution remains impressive. CBOE increased dividends for 14 straight years and has $679.8 million left under its current share repurchase authorization.

However, higher expenses and exposure to credit risk from third parties, including customers, counterparties and clearing agents, also pose risks. The target price, reflecting a downside, also keeps us cautious. Thus, it is better to wait for some time before betting on this Zacks Rank #3 (Hold) stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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