Options Volume Expansion Will Drive Long-Term Earnings Power And Business Diversification

Catalysts

About Miami International Holdings

Miami International Holdings operates technology-driven, multi-asset class exchanges and clearing platforms serving options, equities, futures and international listings.

What are the underlying business or industry changes driving this perspective?

• Continued structural growth in listed options and emerging 0DTE and short-dated contracts, supported by expanding retail participation, should sustain elevated industry volumes and allow MIAX to leverage its rising market share. This directly supports revenue growth and operating leverage.
• The rollout of the MIAX Futures Onyx platform and upcoming Bloomberg 500 and Bloomberg 100 index futures, cleared at OCC near U.S. equity markets, positions the firm to capture new equity index derivatives flow and associated data revenues. This should enhance consolidated revenue and diversify earnings.
• Expansion of international listings through BSX and the recently acquired TISE, with access to European and U.K. issuers, broadens MIAX’s fee base from global debt and specialty listings. This improves the mix of recurring non-transaction revenues and stabilizes net margins over time.
• Scalable, purpose-built technology infrastructure that is already in place across options, equities and futures should accommodate higher throughput without commensurate cost increases. This supports incremental EBITDA margins above recent levels as volumes and product breadth expand.
• Balance sheet strength following the IPO, including substantial cash and minimal debt, gives MIAX capacity to fund additional product launches, selective acquisitions and technology enhancements. This can accelerate top line growth while limiting interest expense and supporting earnings expansion.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Miami International Holdings's revenue will decrease by 23.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from -7.4% today to 31.7% in 3 years time.
• Analysts expect earnings to reach $183.8 million (and earnings per share of $1.69) by about December 2028, up from $-97.1 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 33.4x on those 2028 earnings, up from -35.8x today. This future PE is greater than the current PE for the US Capital Markets industry at 25.2x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.1%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Options and futures activity is currently supported by elevated volatility and strong retail participation, so a prolonged period of subdued market volatility or a reversal in retail trading enthusiasm could materially reduce contract volumes and weaken transaction revenues and operating leverage.
• MIAX is investing heavily in technology platforms, headcount and new trading floors to capture secular growth, but if competitive pricing pressures or slower than expected adoption of products like 0DTE single stock options and Bloomberg index futures emerge, expense growth could outpace revenue growth and compress EBITDA margins.
• The long-term outlook assumes ongoing market share gains in options and expansion across asset classes, yet aggressive responses from incumbent exchanges, regulatory delays on new product approvals or failure of initiatives such as Sapphire and Onyx to scale could cap MIAX's share of industry growth and limit future earnings.
• Strategic acquisitions like TISE and international listing initiatives are meant to diversify and stabilize income, however integration challenges, weaker than anticipated demand from European and U.K. issuers or regulatory shifts in those jurisdictions could restrain recurring nontransaction fee growth and pressure consolidated net margins.
• Although MIAX now has a strong cash position and lower leverage, the company is signaling continued investment and potential expansion into new event based or crypto related contracts, so misallocation of capital into lower return or higher risk segments could dilute returns on equity and dampen long-term earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $48.75 for Miami International Holdings based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $55.0, and the most bearish reporting a price target of just $40.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be $580.1 million, earnings will come to $183.8 million, and it would be trading on a PE ratio of 33.4x, assuming you use a discount rate of 8.1%.
  
• Given the current share price of $42.68, the analyst price target of $48.75 is 12.5% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.