Cboe Global Stock Slips Below 50-Day SMA: What Should You Do Now?

Cboe Global Markets, Inc. CBOE has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. Its share price as of Jan. 2, 2025, was $194.66, down 11.4% from its 52-week high of $221.66.The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this 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 Trading Above 50-Day Moving AverageImage Source: Zacks Investment ResearchPrice Performance of CBOEShares of CBOE have gained 12.3% in a year, underperforming the industry’s 19.2% increase, the Finance sector’s growth of 20.8% and the Zacks S&P 500 composite’s gain of 25.9% in the same time frame.CBOE Vs. Industry, Sector and S&P 500 in a YearImage Source: Zacks Investment ResearchBased on short-term price targets offered by 16 analysts, the Zacks average price target is $261.63 per share. The average suggests a potential 10.3% upside from Thursday’s closing price.Optimistic Growth ProjectionThe Zacks Consensus Estimate for 2025 earnings indicates a year-over-year improvement of 5.7% on 0.4% higher revenues of $2.2 billion. The expected long-term earnings growth rate is pegged at 13.6%, better than the industry average of 8.5%. The company has a Growth Score of A.The Zacks Consensus Estimate for 2025 earnings has moved 2 cents north in the past 30 days.Factors Impacting CBOECboe Global’s organic strength lies in a diversified business mix that ensures uninterrupted revenue generation and recurring non-transaction revenues. We estimate the 2026 top line to witness a three-year CAGR of 6.2%.  CBOE estimates Data and Access Solutions organic net revenue growth in the range of 7%-10% in the medium term. We estimate access and capacity fees in 2026 to witness a three-year CAGR of 5.5% and market data revenues to register a three-year CAGR of 3.7%.The company 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 the 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. Cboe Global has been facing intense competition due to increased market consolidation that tends to reduce market share, and this includes both product and price competition.The company’s investment in European, Canadian and Asia Pacific operations remains exposed to volatility in currency exchange rates through translation of net assets or equity to U.S. dollars.  The company is also exposed to credit risk from third parties, including customers, counterparties and clearing agents.CBOE’s Favorable Return on CapitalReturn on invested capital has hovered around 10% over the last few years. The company has raised its capital investment significantly, reflecting CBOE’s efficiency in utilizing funds to generate income. The return on invested capital in the trailing 12 months was 11.7%, higher than the industry’s average of 5%. CBOE’s return on equity has been improving since 2019, reflecting its efficiency in utilizing shareholders’ funds. ROE over the trailing 12 months was 22.3%, outperforming the industry average of 13.3%.CBOE Shares Are CheapCboe Global shares are trading at a discount to the Zacks Securities and Exchange industry. Its forward price-to-earnings of 22.7X is lower than the industry average of 22.9X.The stock remains attractively valued compared with other players like  Intercontinental Exchange Inc ICE and Nasdaq Inc NDAQ.Parting Thoughts on CBOE StockCboe 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 13 straight years and has $679.8 million left under its current share repurchase authorization. Its discounted valuation and its VGM Score of B raise hope.Yet, higher expenses and exposure to credit risk from third parties, including customers, counterparties and clearing agents, pose a risk. Muted analyst sentiments and share price underperformance also keep us on guard.  Thus, it is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intercontinental Exchange Inc. (ICE): Free Stock Analysis Report Nasdaq, Inc. (NDAQ): Free Stock Analysis Report Cboe Global Markets, Inc. (CBOE): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks