Morgan Stanley 3Q26 Preview: CBOE Double-Upgraded to Overweight; More Resilient Than Expected
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Ahead of third-quarter 2026 results, Morgan Stanley double-upgrades CBOE Global Markets from Underweight to Overweight, lifting the target price from $258 to $358. Extension of the S&P index licensing agreement to 2051 removes a key overhang, and options growth has proved more resilient than expected, with SPX volumes up 24.4% year-over-year in 3Q26. Concerns about competition from perpetual futures and prediction markets are overstated, in the bank's view, since incumbent exchanges can compete through innovative products. It projects CBOE revenue and EPS compound annual growth of 5.8% and 10.2% over 2026-2028. On brokers, 3Q26 earnings estimates were cut by an average of 1.6%, but AI adoption should lift advisor capacity and lower service costs; LPL Financial remains the top pick with a $393 target, with cash monetization a key focus. CME Group stays Overweight with a $337 target on diversified growth vectors, with 2026 revenue seen up 8.7% and EPS up 11.5%, while MarketAxess is Equal-weight at $167. Gemini Space Station (GEMI) is downgraded to Underweight on scaling and earnings growth challenges.
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