On Monday, BMO Capital Markets updated its outlook on TMX Group (X:CN) (OTC: TMXXF), the operator of the Toronto Stock Exchange, by increasing its price target to Cdn$42.00 from Cdn$41.00. The firm maintained its Outperform rating on the stock.
The adjustment reflects TMX Group's strong performance in its high-growth potential businesses. VettaFi, TMX Group's financial data and information subsidiary, is on track to surpass US$100 million in revenues in 2024.
Additionally, Trayport, a provider of trading solutions to the energy markets which is part of TMX Group, has achieved a record quarterly increase in trader subscribers. Moreover, the Montréal Exchange, TMX's derivatives exchange, has been experiencing near-record trading volumes.
BMO Capital Markets highlights TMX's premium valuation as justified, given the company's more predictable and faster-growing revenue streams. The firm's positive stance on TMX Group is supported by the company's execution across its business segments.
TMX Group's strategic focus on expanding its higher-growth potential businesses appears to be yielding tangible results, as evidenced by the performance indicators cited by BMO Capital Markets. The increase in the price target to Cdn$42.00 underscores the firm's confidence in TMX's ability to sustain its growth trajectory.
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