CME Stock Has More Upside Potential After Bitcoin Futures Launch

CME stock hit a record high earlier this month

Dec 18, 2017 at 10:38 AM
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Bitcoin futures began trading on the Chicago Mercantile Exchange today, sending shares of CME Group Inc (NASDAQ:CME) up 0.5% to trade at $151.77. This comes one week after the launch of the cryptocurrency's futures on the Cboe Global Markets (CBOE) -- and follows yesterday's news that TD Ameritrade (AMTD) will allow its customers to trade bitcoin futures on the CBOE. As the digital currency's platform grows, here's a closer look at the sentiment surrounding CME stock.

Taking a quick step back, today's positive price action for the shares is just more of the same. Year-to-date, CME shares are up 31.5% -- pacing toward their best annual return since 2013. And while the equity pulled back after hitting a record high of $155.29 on Dec. 5 as bitcoin bulls took profits, it found a foothold near $150, which is double its 2013 highs.

Not surprisingly, most analysts are upbeat toward CME, with 70% of those covering the stock maintaining a "buy" or better rating. However, the average 12-month price target of $154.82 stands at a slim 2% premium to current trading levels, pointing to the potential for price-target hikes to come down the pike -- and possibly create even bigger tailwinds for CME.

Plus, short sellers appear to be in cover mode, which has likely helped lift the shares to all-time highs. Since mid-March, short interest has dropped 47.2% to 4.18 million shares. It would take shorts more than three days to cover the remaining bearish bets, suggesting there's still some sideline cash available.

Doing a quick check on other stocks with bitcoin exposure, AMTD is trading up 1.4% today, while Overstock.com (OSTK) has surged 10.3% and Longfin (LFIN) has gapped 66.4% higher -- with the latter two fresh off new highs. CBOE, meanwhile, is down 0.2%.

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