TP ICAP PLC (LON:TCAP) is well positioned to capitalise on the structural growth of over-the-counter (OTC) derivatives such as swaps, forward rate agreements and exotic options, according to analysts at Barclays.
The bank initiated coverage of the FTSE 250 group with an ‘overweight’ rating and a 440p price target.
TP ICAP, which was created when Michael Spencer sold Icap's voice business to Tullett Prebon in 2016, is the market leader in OTC derivatives broking, the analysts said, with a 10-year compound annual growth rate (CAGR) of 8%.
The group last month said it had re-engineered its operations during lockdown to maintain continuous global client services and liquidity across all asset classes and desks despite employees working from home.
With the growing importance of proprietary data, the Barclays number crunchers anticipate growth in all divisions, forecasting a CAGR of revenues of 13% for the higher-margin Data & Analytics division through to 2022, with 1.5% growth for the Global Broking arm.
This growth is set to underpin the group's operating margin expansion from 15% last year to 17% by 2022.
Forecasting a CAGR of earnings per share of 7.7% versus the global exchange average of 6.5%, this is above the analyst consensus.