IG Group Holdings Plc (LSE:IGG), the online trading platform, saw its shares rise 11% to 28.63p on Tuesday after UBS upgraded the stock from neutral to 'buy' and raised its price target from 1,250p to 1,600p, citing the company's exposure to heightened market volatility and improving customer growth trends.
The Swiss bank's analysts argued that IG Group, which allows retail and institutional clients to trade derivatives, shares, and cryptocurrencies, is the most directly geared platform to trading volatility among its European peers, with transaction-related revenues making up almost all of its income.
UBS forecast earnings per share growth of 12% per year from 2025 to 2030, driven by 7% annual trading revenue growth, and said the greatest earnings uplift was expected in 2027.
The analysts pointed to a consistent rise in active customers since the fourth quarter of 2024, with year-on-year growth in funded accounts accelerating from 6% in the first quarter of 2025 to 10% in the third quarter, as evidence that strategic initiatives under chief executive Breon Corcoran, who took charge in 2024, were gaining traction.
New product launches, including cryptocurrency trading and free stockbroking, as well as investments in artificial intelligence tools for customer support and compliance, were highlighted as additional growth drivers.
UBS also noted that IG Group's strong regulatory capital position would support ongoing share buybacks of around 5% to 6% per year, helping to drive earnings per share growth above underlying profit growth.
The bank raised its price target primarily by reducing its cost of capital assumption, reflecting greater confidence that the company can deliver on its customer growth and new product targets, and by increasing its long-term growth rate assumption.
UBS described IG Group as trading at a low earnings multiple relative to its historical range and peer group, and said it saw scope for a significant re-rating if the company could demonstrate sustained revenue and earnings recovery.