CBOE's Momentum Fades Amid Valuation Concerns

CBOE Loses Its Edge: Analyst Downgrades Stock on Valuation Worries, Volume Slowdown

The CBOE Holdings, Inc. (CBOE) has lost its edge, according to a recent downgrade from an analyst. The move comes as concerns over valuation and a slowdown in trading volume weigh on the company's stock.

In a note to clients, analyst Todd Sloane at JPMorgan downgraded CBOE's stock from "Overweight" to "Neutral" due to concerns over the company's valuation. Sloane noted that while CBOE has been a leader in the exchange-traded products (ETP) space, the company's stock has become increasingly expensive.

"We believe that CBOE's valuation has become stretched, particularly given the company's relatively slow growth rate and the increasing competition in the ETP space," Sloane said. "While we still believe that CBOE has a strong franchise and a leadership position in the ETP space, we think that the stock's recent run-up has left little room for error."

Sloane's downgrade comes as CBOE's trading volume has slowed in recent months. The company's average daily trading volume has decreased by about 10% over the past year, according to data from the Securities and Exchange Commission.

CBOE's stock has been a strong performer in recent years, more than doubling in value over the past 12 months. However, the company's valuation has become increasingly stretched, with its price-to-earnings ratio reaching levels not seen since the financial crisis.

CBOE's stock closed down 2.5% on Friday at $44.15 per share, after the downgrade was announced. The stock is now trading at a level not seen since September 2019.

CBOE did not immediately respond to a request for comment.