Shares of exchange operator CME Group are due for a comeback as the Federal Reserve hikes rates, Atlantic Equities said Friday. Analyst Simon Clinch upgraded the stock to overweight, saying in a note to clients Friday that CME Group can benefit in a rising rate environment. “We see a pathway to significantly higher earnings power as interest rates volumes normalize from suppressed post-pandemic levels, catalyzed by rising rates, rising inflation, higher bond yields, on a significantly larger base of outstanding US Treasuries.” Clinch noted that CME Group performs well even when the Fed tightens, adding that the company pays an estimated forward dividend yield of over 4%. Shares of the exchange operator have fallen 13.4% year to date but could make a comeback. The firm maintained its $235 price target, which implies a roughly 19% potential return on the stock from Thursday’s close. “We had downgraded the stock earlier in 2022 on concerns that inflation expectations had driven the stock’s valuation beyond underlying fundamentals,” Clinch wrote. “However, we now believe much of that excess has been removed and the shares now offer an attractive return to our target price.” — CNBC’s Michael Bloom contributed reporting
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