Peel Hunt has kicked off its coverage of CMC Markets Plc (LON:CMCX) and IG Group Holdings PLC (LON:IGG) with punchy price targets and ‘buy’ recommendations.
The City broker is tipping IG shares to add more than a third and hit 775p, while it reckons CMC could double to 200p.
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Both companies have seen their stocks fall this year, largely on new rules introduced by European regulators over summer which limits the amount punters can wager.
Peel Hunt thinks these fears have been overdone, especially with CMC and IG focusing on high-value professional clients who are exempt from the new limits.
“Ultimately, high value clients will continue to trade and the market will continue to grow, with the added benefit of a likely re-emergence of volatility that will underpin increased platform trading activity,” read a note to clients.
“Our view is that stocks such as CMC and IG should be valued more like tech stocks given that their platforms are scalable, deliver high margins and generate cash with ongoing technology investment.”
Plus 500 to be more affected
Analysts are less bullish about the prospects for rival trading platform Plus 500 Ltd (LON:PLUS).
Its position as the leader in lower value retail clients means it is likely to be the most affected by the reforms, while Peel Hunt also has concerns about its ability to retain customers.
The brokerage has Plus 500 as a ‘hold’, with a price target of 1,500p, although that is still some 200p higher than where it currently finds itself.
In late-morning trading on Tuesday, CMC shares were up 0.6% to 99.6p, IG shares zipped 3.2% to 556.5p, while Plus 500 shares were broadly flat at 1,293p.