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Wells Fargo Starts Coverage on CME Group as “Market Perform” (CME)

Posted: 10/15/2010 8:40:00 AM
Referenced Stocks: CME

Analysts at Wells Fargo on Friday initiated coverage on futures exchange operator CME Group Inc.( CME ) , 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 Friday.

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 now.

CME Group Inc.( CME ) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .