Shares in trading platform CMC Markets (CMCX), jumped 8.4% to 262p following the announcement of a scheduled pre-close trading update.
Net operating income for the year to March 2022 is expected to be £280 million, which is considerably ahead of analysts’ expectations. This has prompted a series of upgrades to earnings forecasts.
During the last month the stock has risen 16.5%, but on a one-year time frame the stock is down 51%. This is in part a hangover from September 2021, when a sharp fall in trading volumes caused a collapse in earnings and forced the company to issue a profit warning.
Guidance of full year 2022 net operating income of £280 million is 7% ahead of a consensus estimate of £263 million.
The stronger than expected performance has been driven by a particularly robust fourth quarter for the core leveraged trading business. Contracts for difference revenue was £230 million, and stock trading generated £48 million.
BENEFICIARY OF RECENT VOLATILTY
Recent events including the war in Ukraine and a sharp rise in inflation have accentuated market volatility. CMC has been a natural beneficiary of this, given the resulting higher levels of activity.
CMC said its recently-launched share buyback programme was progressing well, and was on track to be completed no later than 30 June 2023.
Last month, the company started buying back 29 million shares at a value of £30 million.
Shore Capital analyst Vivek Raja commented: 'Whilst we expect the market will largely look through the stronger than expected performance in FY22 as attention now turns to FY23 and onwards, we expect the share price to respond positively.'
