- IG Group Holdings
- 30 May 2025 09:36:58
Source: Sharecast
The Canadian bank noted that IG's trading update on 12 May said "the business has performed strongly in Q425" and that it now expects FY results to be ahead of consensus. It also highlighted that IG's Freetrade acquisition, completed on 1 April, was said to have traded well in Q425, with its performance being in line with management's expectations.
Additionally, Canaccord noted that IG refinanced its £400.0m revolving credit facility, due to mature in October 2026, with a £600.0m facility, maturing in May 2030 and pointed out that on 22 May, IG issued £250.0m of fixed rate notes, with a maturity date of 22 October 2030.
Canaccord said that its assumption was that "meaningful spikes in market volatility", a key driver of new client acquisition and trading activity, were infrequent and impossible to forecast and therefore, tried to model more normalised trading conditions, outside of macro and market shocks relevant to its forecast assumptions and horizon. Consequently, after what Canaccord considers to be the short-term boost provided by recent volatility, it expects adjusted earnings per share to decline by 16% year-on-year in FY27.
"We believe investors should consider buying IGG when volatility is low, not at a cyclical high as it has been in recent weeks. This characteristic, coupled with the underlying growth challenge referenced above, talks against us being more positive on the stock at this point," said Canaccord, which did hike its price target on the stock from 782.0p to 1,099.0p.
"We are conscious that the current strategy appears to be focused on increased dividends, further buybacks and possible M&A. This could provide share price support but seems unlikely to deliver strong, sustainable EPS growth."
Reporting by Iain Gilbert at Sharecast.com