We won't know exactly how Virtu Financial fared during the third quarter until November 7, when the high-frequency trader unveils its earnings, but one UBS analyst is betting things won't look good.
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Virtu, the 'ultimate play' on volatility on Wall Street, is set for a rough quarter (VIRT)
UBS slashed its earnings per share estimates for Virtu for the third quarter by near 80%, but kept the same stock price target.
Times are tough for high-speed traders, which do better during more volatile market conditions. The firm posted weak earnings for the second quarter, which came in below Wall Street's estimates. Alex Kramm, an analyst at UBS, said the third quarter will be even worse.
The bank slashed its expectations for the firm's Q3 earnings per share by nearly 80% to $.04 from $.19. The firm delivered $.13 per share to investors in the second quarter of 2017.
Markets haven't gotten more active since Q2. Average equities volatility were down 17% compared to Q3 of 2016 and volatility for commodities were down 27%, according to UBS. There were some bright spots, however. FX volatility was up 2% over quarter 2 of 2017.
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UBS has not changed its $18 price target for Virtu, a stock for which the bank has a buy rating. It is looking to the fourth quarter to see where the company stands when Virtu and KCG are fully integrated.
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