Bats Global Markets (BATS:BATS) - Buy Recommendation - $27.25

The 25-day quiet period on Bats Global Markets will come to an end on May 10, 2016, allowing the firm's IPO underwriters to publish reports and recommendations on BATS for the first time.

We previewed this event on our IPO Insights platform recently. (After a technical glitch in its first IPO attempt in 2012, BATS successfully went public on its own exchange on April 14th.)

BATS is now the largest U.S. equities market operator with four exchanges: the Bats BZX Exchange, BYX Exchange, EDGA Exchange, and EDGX Exchange.

Bats Global Market's share price will likely see a temporary increase as a result of the release of underwriter reports, opening a new buying window before the event for this growing company.

Business Overview: Second Largest Stock Exchange Operator in the United States

According to its filings, BATS is the second largest stock exchange operator in the United States, with the NYSE being the largest. BATS holds a 21.1% share of the US equities markets, with the NASDAQ holding 18.8%. The company offers services for investors, traders and issuers worldwide. Their proprietary platform facilitates trading in securities and exchange traded products (ETPs) for its U.S. and European equities markets and two U.S. options exchanges. In addition, BATS operates Hotspot, an institutional spot foreign exchange market.

BATS also operates the largest exchange in Europe, ahead of the Deutsche Borse and the London Stock Exchange.

BATS noted in its SEC filing that its proprietary platforms are now reliable, stating that there was "very low operational downtime, as demonstrated by the fact that for the years ended December 31, 2015 and 2014, all of our global markets were immediately and automatically accessible (i.e., fully operational) 99.994% and 99.991% of the time, respectively."

Management Team Highlights

CEO, President and Director Christopher Concannon has served in his positions since December 2014. His previous experience includes senior positions at NASDAQ QMX Futures Exchange, Virtu Financial, NASDAQ OMX Group, Instinet Group, and Morgan, Lewis & Bockius LLP. Mr. Concannon received a B.A. Degree from The Catholic University of America in 1989, an M.B.A. from St. John's University and a J.D. from the Columbus School of Law at the Catholic University of America.

EVP and Head of Corporate Development Anthony Barchetto also serves as SVP of Business Development at Bats Global Markets. His previous experience includes senior positions at Direct Edge, Liquidnet, and Citigroup's Lava Trading. He was also a NASDAQ market maker with Knight Capital Group. He is a CFA charter holder and holds a BS from Georgetown University's School of Foreign Service. Mr. Barchetto holds Series 7, 63, 55, and 24 licenses.

Competitors: NASDAQ OMX Group and London Stock Exchange Group

Bats Global Markets faces competition from three primary sources: NASDAQ OMX Group, the London Stock Exchange Group and NYSE Euronext Holdings.

Early Market Performance

Bats Global Markets was priced at $19, at the high end of its expected price range of $17 to $19. The stock opened at $22.88 and closed at $23.0 on its first day of trading. It reached a low of $22.85 on April 22 and a high of $23.96 on April 26. Currently, BATS trades at $23.78 (5.4.2016).

(Google.com/Finance)

Conclusion: Powerful Underwriters Could Boost Share Price at Quiet Period Expiration

Bats Global Markets' IPO underwriters could seek to capitalize on the stock's decent growth through the release of positive reports beginning with the conclusion of the quiet period.

These underwriters include Citigroup, Morgan Stanley, BofA Merrill Lynch, Credit Suisse Securities, Goldman Sachs, J.P. Morgan, Jeffries Securities, Barclays Capital, Deutsche Bank Securities, Nomura, Rosenblatt Securities, and Sandler O'Neil and Partners.

Current research shows a significant potential for above-market returns in the five days prior to and two days after the conclusion of the event; savvy investors might buy BATS ahead of May 10th to take full advantage of the incline.

Disclosure: I am/we are long BATS.