CMC Markets PLC (LON:CMCX) was reiterated as a ‘buy’ by broker Shore Capital in a note on Monday.
Recent results for the year to March 2021 capped off a “stellar year” in terms of trading and client growth, with results slightly ahead of consensus, the Shore Cap analyst Vivek Raja noted, including a better performance in stockbroking than expected and the construction of a UK investment platform said to be well underway.
The development costs of this platform are incorporated in Shore Cap’s forecasts, however, with the exact date of launch still not confirmed, the Raja is not yet adding any contribution to revenue.
“FY21 results were always going to be about current trading so moderation in client activity and no guidance improvement has put a pause on an upgrade cycle which started in late 2019 and has, in our view, catalysed some profit taking,” he said.
While activity levels per client have recently eased to pre-pandemic levels, CMC Markets now has an active client base around a third larger than before.
“Following recent share price weakness and based on our estimates for the existing CFD and Stockbroking businesses, we see CMC as attractively valued with an unchanged fair value estimate of 550p,” the analyst said.
“As such, we see potential earnings from the UK investment platform offering option value.”
On unchanged EPS estimates, CMC trades on a 12-month forward P/E of 12.3 times and yields 4.0% in respect of the year to March 2022.