CMC Markets is “uninvestable” at present, according to Shore Capital, which has made further ‘sharp’ cuts in its earnings forecasts led by revenue in its trading division.
In trading, lowered revenue expectations reflect both the core retail CFD business and the recent strategic pivot into institutional CFD flow.
Subdued market volatility has constrained retail client activity levels, while for institutional business revenue conversion from gross volumes (client income retention) reduces further to reflect greater hedging costs.
“Any profit CMC produces in the year to March 2024 will be a fraction of the more than £50m pre-tax in FY23,” Shorecap added.
Fair value drops to 70p, from 75p, but remains a sell until there is sustained improvement in the revenue trajectory.