The company did not give a specific figure for net operating income for the first quarter (three months to the end of June) but did note that it was higher than the £102.3mln reported for the first six months of the previous fiscal year, with trading activity around double the level seen in the corresponding quarter of 2019.
Sticking with the theme of comparing this year’s first quarter with last year’s first half, CMC said client income retention was materially higher than the 82% reported in the first half of fiscal 2020 while stockbroking net trading revenue also continues to benefit from the market conditions.
“Our investment in technology continues to attract and retain clients, with market-leading functionality and robust operational performance through these extremely high volume periods. Client acquisition and active client numbers remain at elevated levels,” CMC told investors in a trading update.
In morning trade on Friday, shares in CMC were up 17% at 330.00p.
Peel Hunt ups target price
The news prompted analysts at City broker Peel Hunt to up their target price for CMC shares to 300p from 285p and repeat an 'add' rating on the stock, noting that the update was: "Short but positive".
In a note to clients, the Peel Hunt analysts said: "The conclusion is that even if more normalised trading, net operating income will be ahead of the top of the consensus range (£255.6m compared to our £249.5m).
"Assuming that the top of the range increases by c10%, most of which drops through to profits, the upgrade to our PBT of £89.2m is about 35%, taking us to c£120m (which would be EPS of 32p. Would leave stock on March 2021 PE of 8.8x, yielding 5.7%."
-- Adds analyst comment, updates share price --