UPDATE: Compass Point Research & Trading Initiates Coverage on CBOE Holdings with Neutral Rating, $30 PT

In a report published Wednesday, Compass Point Research & Trading initiated coverage on CBOE Holdings (NASDAQ: CBOE) with a Neutral rating and $30 price target.

Compass Point noted, “We are initiating coverage of CBOE with a Neutral rating and $30 price target. CBOE was the original pioneer of listed options and is now one of the largest options exchanges in the United States. Historical growth trends have been strong with US options ADV increasing 18% per year over the 2000-2011 period and CBOE ADV increasing 20% per year over the 2005-2011 period. 2012 industry volumes, however, were down year over year for the second time in the past 20 years. Despite the current softness, future growth prospects remain favorable supported by increasing buyside trading, the OTC opportunity, and international expansion. While we find the secular growth opportunity attractive, with the shares trading at ~17x our estimate of FY'13 EPS as compared to our FY'13 EPS CAGR forecast of 9%, we prefer to wait for a more attractive entry point. Our optimistic bias is supported by the company's zero debt balance sheet and takeout prospects.”

CBOE Holdings closed on Tuesday at $31.23.