CME (CME) has seen a stock pullback due to investor concerns over perpetual futures, but perpetuals will likely pose a minimal competitive threat for the company, RBC Capital Markets said in a note Tuesday.
Perpetuals instead represent a "potential new asset class with incremental revenue opportunities" over the long term," the brokerage said after meetings with the management.
RBC said CME's Chief Financial Officer Lynne Fitzpatrick, who will transition to chief executive next year in March 2027, does not expect strategic shifts. Fitzpatrick highlighted growth drivers, including volume tailwinds across rates and energy, international expansion, new products, and pricing power, as well as operational efficiency gains, according to the note.
On CME's partnership with Alphabet's (GOOG, GOOGL) Google, the brokerage said this will likely deliver GenAI capabilities and cloud migration benefits.
The brokerage also said it expects operating leverage and opportunistic buybacks to sustain EPS growth, which along with a solid dividend yield should lead to strong shareholder returns.
RBC has a sector perform rating on CME, with a $302 price target.
Shares of CME were down 1% in Wednesday trading.
Price: 239.78, Change: -2.48, Percent Change: -1.02
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