In a first-half update to 30 November, online trading company IG Group (IGG) confounded analysts’ expectations yet again, delivering second quarter revenue growth of 71% to £207 million. The shares gained 2.2% to 846.5p.
For the first half the company expects revenues to be around £416 million, up 66% on the prior year. Although no details were given about current trading, Brexit uncertainty is likely to have induced continued elevated trading activity.
The active client base has increased significantly over the last year and now numbers 207,000, up from 133,800 in the first quarter.
Increased trading activity has been seen across the industry during the pandemic as more people have been stuck at home.
FURTHER BROKER UPGRADES LIKELY
Given consensus analyst revenues expectations of around £642 million for the full year to 31 May 2021, today’s update is likely to result in further upgrades.
Shore Capital commented, ‘even if we continue to assume normalisation in trading conditions in H2, there is room for material double-digit upgrades to current year EPS, having last upgraded only as recently as September.’
Numis said, ‘maybe the IG screen is now semi-permanently sitting in a corner of the PC screen, in a manner in which it could never have been when working in the office.
‘We therefore continue to see our forecast risk to the upside should the trading environment prove to be more buoyant and/or customers structurally just trade more frequently.’
IG BOBS WHEN THE MARKET WEAVES
In addition, Numis noted that historically IG tends to grow the fastest during times of market and economic stress. For example, during the credit crisis in the five years through 2013, IG grew EPS by 176% compared with 2% for the market.
With significant growth opportunities in Japan, emerging markets and the US, the broker expects IG to best its target of achieving £100 million of incremental revenues from these markets over the medium term.
