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Investing.com -- HSBC downgraded Marex Group PLC (NASDAQ:MRX) to “Hold” from “Buy” saying the company’s strong performance is now reflected in its stock price after a significant rally since its April 2024 IPO.

Marex, a financial services firm specializing in commodities and markets trading, saw a 64% increase in its stock price last year, with an additional 16% rise in early 2025. HSBC raised its price target to $36 from $33 but noted limited room for further gains.

Marex benefited from market volatility and high interest rates in 2024, leading to a 34% jump in annual earnings and a 28% rise in revenue. Growth was broad-based across the company’s businesses, with market-making revenues up 35% and agency trading up 28%.

Clearing services, which help process and settle trades, also outperformed expectations. Client balances surged 22% to $15.5 billion in the fourth quarter, boosting commission and interest income. However, HSBC cautioned that falling interest rates could reduce future earnings.

Marex remains optimistic about 2025, aiming to expand its client base and enter new markets. HSBC expects organic revenue growth of 8% this year, with additional upside from potential mergers and acquisitions.

The company plans to maintain its track record of four to five acquisitions per year, though HSBC noted that organic growth through client expansion and product development will be key drivers.

Despite Marex’s strong outlook, HSBC pointed out that the stock is now trading at 10.8 times its expected 2025 earnings, higher than its closest competitor, StoneX, at 9.8 times. Given the stock’s recent rally and the potential for a less favorable market environment, HSBC believes further gains would require exceptional and sustained growth.

As a result, the bank downgraded Marex to “Hold” from “Buy,” indicating that while the company is performing well, its current valuation limits further upside for investors.

This content was originally published on http://Investing.com