Atlantic Equities said on Friday that shares of exchange operator CME Group are set to bounce back due to a rate hike by the Federal Reserve. Analyst Simon Clinch upgraded the stock to overweight, saying in a note to clients Friday that CME Group could benefit in a rising rate environment. “We see a path to higher income power as interest rate volumes normalize from suppressed pandemic levels, catalyzed by rising rates, rising inflation, higher bond yields, which can lead to significantly larger amounts of outstanding US Treasuries. is based.” Clinch noted that CME Group continues to perform well even when the Fed is tough, adding that the company pays an estimated forward dividend yield of more than 4%. Shares of the exchange operator are down 13.4% so far, but they could bounce back. The firm maintained its $235 price target, which means a roughly 19% potential return on the stock from Thursday’s close. “We downgraded the stock earlier in 2022 on concerns that inflationary expectations had driven the stock’s valuation beyond the underlying fundamentals,” Clinch wrote. “However, we now believe that excess has been removed and the shares now provide attractive returns at our target price.” — CNBC’s Michael Bloom contributed reporting
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