After interim results from CMC Markets PLC (LSE:CMCX) broker Shore Capital nudged its forecasts for the current year higher but maintained a ‘hold’ rating on the shares.
With progress on platform upgrades, expansion of product ranges and launch of new business lines all said to be on track, CMC reiterated its 30% revenue growth guidance for the next three years.
Guidance for costs for the current year was maintained at £215mlm, though 2024 was signalled higher owing to “further expansion into the institutional space and the geographic expansion of the investment business”.
Analyst Vivek Raja said he did not anticipate making large revisions to forecasts at this stage, saying the current year was “likely to nudge higher” and the subsequent two years “likely flattish”.
Noting the CMC shares were trading at 12.2 times forecast earnings with a dividend yield of 3.3%, the analyst said the stock has “performed strongly on a relative basis over the past month (+10% vs. the FTSE All Share) and, in our view, is broadly up with events”, seeing fair value at 260p.
House broker Peel Hunt slightly increase revenue assumptions for the current year given the performance in the first half, with the effect of increasing FY23 estimates by 8%.
Analyst Stuart Duncan said he now expects profit before tax of £70.4mln and earnings per share of 19p for the current year, up from £65.4m/17.6p previously and compared to a consensus forecast at £67mln.
“For the following year, we take a more conservative approach to costs, given the current inflationary pressures and reduce estimates by c.9%.”
In his view, the current enterprise valuation of circa six times EBITDA "remains significantly below what we see as the true value of the business", with the Peel Hunt target price remaining at 462p.