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What's in the Cards for MarketAxess (MKTX) Earnings in Q1?

MarketAxess Holdings Inc. MKTX is scheduled to report first-quarter 2021 results on Apr 22.

The Zacks Consensus Estimate for the company’s first-quarter earnings and revenues is pegged at $2.12 per share and $194 million, respectively, indicating a rise of 8.16% and 14.8% each from the corresponding prior-year quarter’s reported figures.

Factors to Impact Q1 Results

During the quarter, credit market share was volatile, dropping to lower levels in January and February but then rising to a more typical share in March.

MarketAxess also reported first-quarter 2021 volumes. During the quarter, the company’s total trading volume declined 9.5% from first-quarter 2020 figure to $1.9 trillion. Also, the quarter’s ADV of $30.7 billion fell 9.4% from the year-ago comparable period.

The downside was due to 22.4% decrease in trading volumes with respect to rates products. The Zacks Consensus Estimate for commission revenues for rates trading is pegged at $5.10 million, indicating an 11% decline from the year-ago reported level.

However, the company’s quarterly volumes were partly driven by a respective 18.6% and 10.1% rise in trading volumes, pertaining to other credit and U.S. high-grade products, which reflect market share gains.

The 16% increase in credit trading volume and a likely higher overall credit fee capture are expected to have resulted in better commissions in the quarter to be reported. The Zacks Consensus Estimate for total commission revenues pertaining to total credit stands at $179 million, implying 19.3% growth from the year-ago reported figure.

Open Trading is likely to have shown sustained growth, demonstrating the central role of MarketAxess’ marketplace in today's credit market. For the quarter, Open Trading represented approximately 33% of its global credit trading volume, up from 31% in the first quarter of 2020.

In the years following the implementation of MiFID II, the company’s post-trade services business grew substantially, a trend that most likely continued in the to-be-reported quarter. The Zacks Consensus Estimate for revenues from post trade services is pegged at $8.59 million, suggesting 107% growth from the year-ago reported figure.

The company is investing heavily in expanding its portfolio of products, protocols and clients to continue with its track record of sustainable growth. This, in turn, might have escalated operating expenses.

Earnings Surprise History

The company boasts a stellar earnings surprise record. Its bottom line beat estimates in each of the trailing four quarters, the average being 3.27%. This is depicted in the chart below:

MarketAxess Holdings Inc. Price and EPS Surprise

MarketAxess Holdings Inc. price-eps-surprise | MarketAxess Holdings Inc. Quote

Here is what our quantitative model predicts:

Our proven model does not predict an earnings beat for MarketAxess this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: MarketAxess has an Earnings ESP of -0.09%.

Zacks Rank: MarketAxess currently has a Zacks Rank #3.

Stocks to Consider

Some stocks worth considering with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Intercorp Financial Services IFS has an Earnings ESP of +6.77% and is presently Zacks #2 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intercontinental Exchange Inc. ICE has an Earnings ESP of +0.77% and is a #2 Ranked player, presently.

Oportun Financial Corporation OPRT has an Earnings ESP of +60.00% and is a #2 Ranked player, presently.

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