Citing current market conditions, Morgan Stanley (NYSE: MS) analysts have upgraded three financial stocks, specifically within the hedging and trading services industry: Cboe Global Markets (NASDAQ: CBOE), CME Group (NASDAQ: CME), and MarketAxess (NASDAQ: MKTX).
These firms operate platforms for trading securities like options, futures, and bonds—markets that typically see surging demand during uncertain times as investors seek ways to hedge risk and rebalance portfolios.
CBOE: Volatility Tailwinds for the Global Options Leader
Cboe Global Markets—the parent of the Chicago Board Options Exchange, the world’s largest options exchange—was one of the recipients of an upgrade.
[content-module:Forecast|NASDAQ: CBOE]Morgan Stanley lifted its price target on the stock from $193 to $235 on April 8, signaling an 8% upside from the April 14 closing price of $217.
Cboe offers products like S&P 500 Index options and volatility derivatives based on the Cboe Volatility Index (VIX)—the most used index for measuring market volatility, which Cboe itself created. Morgan Stanley believes that this increased market volatility due to recent tariff news and broader geopolitical risks will benefit Cboe as more investors look to hedge their portfolios using options.
Morgan Stanley expects demand for these products to grow, which would boost Cboe's transaction revenues.
In contrast to many stocks in 2025, Cboe has performed very well, with a total return of over 11%. Even before Trump's Liberation Day announcement, tariff uncertainty may have boosted demand for Cboe’s index options. The firm reported a 30% jump in option volumes in March from the prior year.
CME: Largest Derivatives Marketplace Looks Poised for Higher Volumes
Morgan Stanley also upgraded CME Group, raising its price target from $263 to $301 per share, a projected upside of 14%.
[content-module:Forecast|NASDAQ: CME]CME stands for the Chicago Mercantile Exchange, the largest futures exchange in the world. CME Group was formed from the merger of CME and other exchanges. It runs the largest marketplace in the world for derivatives trading. CME Group provides a very wide variety of securities. It allows investors to trade derivatives on interest rates, equity indexes, agricultural products, metals, foreign exchange, and energy products.
Like Cboe, Morgan Stanley believes that more market uncertainty will boost demand for its futures and options trading products. Interest rate products made up by far the most of CME’s average daily trading volume in Q1 2025, accounting for around 50% of the total.
Morgan Stanley is notably the most bullish on increased demand for interest rate products, predicting 15% higher trading volume in 2025 and 12% higher volume in 2026. It also raised its CBOE earnings per share (EPS) estimates by 5% for 2025 and 7% for 2026.
CME has already returned more than 14% year-to-date and reported record-breaking trading volumes in Q1, signaling investor readiness to hedge rate risk.
MarketAxess: Recession Play via Quality Bonds
MarketAxess, a top-tier electronic bond trading platform, also received a rating upgrade from Equal Weight to Overweight.
[content-module:Forecast|NASDAQ: MKTX]Although Morgan Stanley lowered its price target on the stock from $264 to $263, it still suggests an 18% upside.
Unlike CBOE and CME, MKTX’s upside is tied to rising recession concerns. Morgan Stanley believes that corporate bond trading will increase as investors move toward higher-quality bonds and potentially away from stocks. In 2024, high-grade U.S. bonds accounted for the vast majority of the firm's trading volume. This means the stock can greatly benefit from increased demand there.
In a similar thread to the other two firms on this list, the company saw record single-day trading volume in U.S. government bonds on April 9. MKTX stock is down less than 2% in 2025 so far.
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