Liberum upgrades IG Group to 'buy'
Liberum upgraded IG Group to ‘buy’ from ‘hold’ and lifted the price target to 986p from 770p.
The brokerage said IG’s full-year 2016 results surprised on the upside, not with the modest earnings per share beat but with the “incredibly strong” growth in new accounts opened. As a result, it has upped its EPS forecasts for 2017 and 2018 by 6% and 12%, respectively.
Liberum pointed out that the number of new accounts opened was up 42% year-on-year and 21% ahead of expectations. It said this bodes well and gives it cause to suggest IG is returning to growth after a three year period of broadly flat active client and EPS growth.
“Trading remains highly correlated to market volatility but the underlying growth opportunity looks promising. After a strong run there is no need to rush but the investment case merits further attention.
“We have not changed our view that IG’s trading remains deeply correlated to market volatility and thus investors may wish to carefully choose their point of entry. However, we have more comfort in the underlying growth story than we have had for over four years.”
At 0911 BST, IG shares were up 0.9% to 930p.