Analysts at Wells Fargo on Friday initiated coverage on futures
exchange operator CME Group Inc.(
) , noting they see a flat risk/reward at current levels.
The firm set a "Market Perform" rating on CME with a valuation
range of $280-290. That range represents a 6% to 9% upside to the
stock's Thursday closing price of $264.93.
A Wells Fargo analyst commented, "CME possesses dominant share
across its products and we favorably view its futures intensive
franchise. However, we view the shares as fairly valued given our
near term concerns regarding weak economic conditions…Given the
uncertain economic outlook, we view the risk / reward as balanced.
We are introducing 2010, 2011 and 2012 EPS estimates of $15.37,
$17.03 and $19.46, respectively."
CME Group shares were mostly flat in premarket trading
The Bottom Line
We had removed shares of CME from our recommended list back on May
6, when the stock was trading at $324.67. The company has a 1.74%
dividend yield, based on last night's closing stock price of
$264.93. The stock has technical support in the $248-$260 price
area. If the shares can firm up, we see overhead resistance around
the $277-$282 price levels. We would remain on the sidelines for
CME Group Inc.(
) is not recommended at this time, holding a Dividend.com DARS™
Rating of 3.3 out of 5 stars.
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, as well as a detailed explanation of
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