Traders love volatility. Without it, screens stay quiet, commissions ease off, and brokers feel the pinch.
IG Group Holdings Plc (LSE:IGG) first-quarter update showed just that: calmer markets meant lighter activity, but analysts argue the investment case for the platform remains intact.
For the three months to the end of August, revenues slipped 4% year on year to £268 million, and were down 6% on the previous quarter.
Strip out the contribution from recently acquired Freetrade and the organic decline was 7%. Customer income retention held up, but volumes simply weren’t there in more stable markets.
Yet scratch the surface, and growth is evident. Active clients rose 3% to nearly 279,000, “first trades” surged 42%, and funded customers were up 7%.
Freetrade added around 460,000 new customers on top, with assets under administration rising to £7.6 billion. Its own revenues jumped 32%, a useful injection of momentum into IG’s customer funnel.
Panmure Liberum stresses that IG’s guidance is unchanged: management still sees the year as “in line with expectations” on both revenues and cash EPS.
That matters because, on consensus forecasts of about 111p earnings per share, the stock trades on just 10 times forward earnings and yields roughly 4.5%.
Add in a £125 million buyback, and the possibility of more later in the year, and the shareholder return story looks supportive.
Panmure is a 'buyer' up to 1,530p, a 44% premium to the current price of 1,061p.
Peel Hunt, more cautious with a 'hold' recommendation, also points to the subdued trading backdrop, but values the stock at 9x earnings and a 5% yield.
Both houses note IG’s balance sheet strength and steady cash generation give it options even when markets lack spark.
The real takeaway? IG is proving resilient. In stormy markets, it thrives; in calm ones, it still grows the customer base and hands cash back to investors. That mix, analysts suggest, is worth holding on to.