We see an opportunity to own a great long term asset that can compound 10%+.
We like everything about MKTX, the high quality, low capital intensity, depressed margins, the recent stock weakness, plus the highly likely cyclical rebound.
The market is worried on two fronts:
Tradeweb taking share
Fee compression which is driven by cyclical factors-
We think both concerns are overdone. Our 2024 EBITDA estimates are 20% above consensus.
The challenge has always been valuation, how much should we pay for this sort of asset? After the derating, we think it is easier than it has been.
Potential Upside: $410-$430 (+27%) Sensible Downside: $275 (-18%)
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