Investors looking to play defense in a beaten-up market riddled with volatility may find some relief in exchange operator CME Group, Oppenheimer says. Analyst Owen Lau upgraded CME Group to outperform from perform, saying in a note to clients that the exchange operator is a good pick for investors “defending against the bear.” “Our upgrade thesis has come down to four key points: 1) attractive valuation; 2) rising interest rate with low balance sheet risk; 3) appealing dividend policy; and 4) high margin and healthy growth profile,” Lau wrote. “The upgrade is predicated upon our assumption that no extreme events and recession are imminent, and there is a defensive angle in this call in light of current volatility and uncertain environment.” Stocks have struggled this year, with the S & P 500 falling 17.3%, as inflation surges to its strongest levels in decades and the Federal Reserve tightens monetary policy. Late last week, the benchmark dipped into bear market territory — down more than 20% from a record close set in January. Concerns over a potential recession have also dented stocks in 2022. While the markets and economy may be in the “early days” of the Fed’s hiking cycle to curb inflation, rising rates could benefit CME as its interest rate business comprises 25% of the company’s revenue, Lau wrote. Among the reasons for the upgrade, he also cited a high dividend yield and a strong balance sheet. Oppenheimer anticipates CME can pay a $3.75 a share variable dividend by the end of the year, or a 3.7% total dividend yield. Shares of CME have plummeted 16.1% since the start of the year, but Oppenheimer thinks there’s room for growth. The firm raised its price target on the stock to $223 a share, which implies a 16.3% potential return from Tuesday’s close. “The valuation has come down to a reasonable level that we believe presents an attractive entry point for investors,” Lau said. “Albeit the macro uncertainty, the competitive moat of CME remains.” — CNBC’s Michael Bloom contributed reporting