Argus Research Initiates Equity Research Report Coverage on OTC Markets Group Inc. (OTCQX: OTCM)
Argus Research has initiated coverage of OTC Markets Group Inc. (OTCM) with a positive outlook based on the company's strong fundamentals. The report highlights OTCM's diverse revenue streams, notably high retention rates over 90% for its premium services, and strong cash flow generation. The firm estimates a fair value of $69.00 per share, significantly above the current price of $55.00. OTCM's market performance aligns closely with the broader market, trading at 22-times 2022 EPS of $2.52, indicating room for growth relative to industry peers.
- Strong revenue retention rates over 90% for premium services.
- Positive pricing trends and a growing international subscriber base.
- Generated over $50 million in shareholder returns since 2020.
- Trading at $55.00, with a fair value estimate of $69.00.
- Shares have declined year-to-date in line with the broader market.
NEW YORK, Aug. 25, 2022 /PRNewswire/ -- Argus Research, an independent investment research firm, has launched Equity Research Report coverage on OTC Markets Group Inc. (OTCQX: OTCM)
Click Here to view full Argus Equity Research Report.
COMPANY HIGHLIGHTS: Excerpts (as conveyed by Argus Analyst Steve Silver) include:
OTCM: Operating Regulated Markets to Facilitate Trading and Transparency Among Stakeholders
- In our view, OTC Markets Group has built a robust suite of technology-driven products and services that impact a wide array of stakeholders across the financial market value chain. The company serves corporate issuers, broker-dealers and regulators involved in the OTC securities market.
- Importantly, much of the company's revenue base is derived from subscriptions. Its premium Corporate Services products, OTCQX and OTCQB, have seen more than
90% retention rates in recent years, which we think mitigates the normal volatility across various financial market conditions. Despite a balanced revenue mix between its three complementary operating units, we see strong continued growth prospects for Corporate Services, which is supported by robust client retention, positive pricing trends and an expanding subscriber base, notably among international entities. - We view positively OTC Markets' history of strong cash flow generation, and a shareholder-friendly strategy of returning capital to investors through both regular and special dividends, as well as through share repurchases. Since 2020, the company has returned more than
$50 million through dividends and share repurchases. - Year-to-date, OTCM shares have declined at a rate near that of the broader market, and we believe that OTC Markets Group's fundamentals remain strong. The shares are currently trading at roughly 22-times our 2022 EPS estimate of
$2.52 , which we view as below approximately 28-times for a peer group of financial equity exchange operators and data providers. Given the operational execution, strong balance sheet, and inherent EPS leverage with only 11.9 million shares outstanding, we think the shares should trade more in line with its peers. As such, we see a fair value estimate of$69.00 per share, above the current level near$55.00 .
INVESTMENT THESIS: Click Here to view full Argus Equity Research Report and Investment Thesis.
OTC Markets Group Inc. (OTCQX: OTCM) www.otcmarkets.com
New York-based OTC Markets Group Inc., whose predecessor entities date back to 1904, operates regulated markets for trading 12,000 U.S. and international securities. The company has three business lines: OTC Link, which operates SEC regulated alternative trading systems, providing trading services to broker-dealer subscribers including quotation, messaging and trade execution and reporting services; Market Data Licensing, which provides actionable market and compliance data for a wide spectrum of securities via licenses to its subscribers; and Corporate Services, which operates the OTCQX and OTCQB markets and provides services to client companies designed to promote public disclosure, transparency and communications with investors.
For more information please contact:
Antonia Georgieva
Chief Financial Officer
Phone: 212-220-2215
Email: ir@otcmarkets.com
Headquartered in NYC, Argus Research (www.argusresearch.com) is a leading independent equity research firm (est. 1934) ̶ providing fundamental and quantitative research coverage on more than 1,600 companies across all 11 sectors of the S&P 500, as well as macroeconomic and equity market forecasts, thematic research, model portfolios and IPO research. In addition, Argus has recently committed to providing a sponsored research solution for small & mid-cap companies seeking coverage. Argus's Equity Research & earnings estimates are available on major research / earnings estimate aggregator platforms, including Bloomberg, Thomson Reuters, Factset and S&P Global.
For more Information please contact:
Darrell Stone
646-747-5438
dstone@argusresearch.com
Argus Research Co. has received a flat fee from the company discussed in this report as part of a Sponsored Research agreement between Argus and the company. No part of Argus Research's compensation is directly or indirectly related to the content of this assessment or to other opinions expressed in this report. Please refer to the full Argus report and the disclaimer for complete disclosures.
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SOURCE Argus Research
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