CME - CME Group upgraded to Buy at Deutsche Bank on valuation dividend yield

Deutsche Bank analyst Brian Bedell has upgraded CME Group ( NASDAQ: CME ) to Buy from Hold, after the stock's 33% decline from its 52-week high in March brings its risk-return to a more positive skew.

With an estimated dividend yield of 5%, "we view the stock as offering excellent value with a solid income stream, which may easily become more attractive should a challenging market and macro backdrop persist for some time," the analyst said in a note to clients.

He also sees a "modestly better volume outlook for CME.

CME shares have gained 0.6% in Wednesday premarket trading.

Overall for the alternative managers and exchanges segment, Bedell is cautious for the near-term on the prospect that Q3 earnings and management comments may produced downward EPS revisions for Q4 consensus for moer than half of his coverage.

He favors Charles Schwab ( NYSE: SCHW ) for its continued leverage to higher interest rates, strong organic growth, and mild headwinds from weaker market returns. Alternative managers are next best positioned, he said, with a preference for Blackstone ( NYSE: BX ).

Bedell's Buy rating on CME ( CME ) contrasts with the Quant rating of Hold and agrees with the average Wall Street rating of Buy.

SA contributor Leo Nelissen calls CME ( CME ) the perfect dividend stock to buy while it's cheap

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