Shares of Chicago-based CBOE Holdings Inc. (CBOE) soared 16 percent to $33.75, a day after the creator of VIX and operator of the biggest options exchange raised $339 million selling 11.7 million shares at $29 each. CBOE Holdings PPS came in at the top of the IPO’s expected range of $27 to $29, proving that the shares of the most anticipated offering so far this year weren’t price too richly.
CLSA analyst Rob Rutschow on Tuesday initiated coverage of the newly minted shares of CBOE with an outperform rating and a $32 price target.
MW: “CBOE is one of the largest options exchanges in the U.S., and a unique property given exclusive rights to some S&P and Dow Jones indexes and status as a pure-play options exchange. New fees for trading permits and a big share buyback should drive nearly 40% EPS growth in the next two years,” the analyst said.
“Scarcity value should also help CBOE trade at a premium,” he wrote in a note. “While we expect the options industry to see good growth in volume as institutions make up a larger portion of volume, pricing pressure, market-share losses and changing regulations are risks for CBOE.”
The IPO, which gave CBOE a market value of $2.97 billion, was underwritten by Goldman Sachs (GS) and Bank of America/Merrill Lynch (BAC).
Shares of CBOE are advancing 14% to $33.06 in afternoon trading on 13+M volume.