CFD broker, IG Group issued its pre-close trading update this week ahead of fourth-quarter and full-year figures that are scheduled for July 23rd 2020.
Readers may recall that RBC or Royal Bank of Canada, published a bullish note on IG Group back in the early part of May. In which it suggested that IG should achieve revenues of £3.0 million per day, in the remainder of the fourth quarter2020, which ended on May 31st. See our article here.
IG didn’t disappoint and in its trading update, it suggested that revenues for Q4 2020 would come in at around £259 million up by more than +48% from the groups own Q4 revenue forecast of £173 million. Which was published on April 24th and more than double the £117.90 million in revenue that IG billed in Q4 2019. You can read our IG Review here.
As to the full year, IG anticipates revenues in the order of £649.0 million compared to £476.90 million the full year 2019 a jump of around +35%.
IG said that
“Financial market volatility has remained elevated and the Group has continued to see high levels of client trading activity”
The performance is all the more impressive because like many other organisations IG has had to transitions its operations away from its offices, to allow staff to work from home. That process may have incurred additional costs of course, which could bite into the bottom line but it does seem to be business as usual at the world’s leading margin trading group.
A further testament to that, was the launch this week of a new brand identity for the company’s trading division. The changes are subtle but engaging with a bold red colour scheme and a sharp new look logo, among the initiatives. Overall the new branding scheme looks professional and dynamic, which given the numbers discussed above is what you would expect.
In Q3 2020 IG managed an operating profit margin of 40.1% and at that time they set an internal target to raise revenues by around 3 to 5% per annum over the medium term. With the goal of adding an addition £100 million of revenues by 2022, from what CEO June Felix described as significant opportunities.
IG Group has clearly delivered early on these targets. The questions now, of course, will be just how much of the growth that IG has enjoyed over the first 5 months of 2020 was a one-off?
And how much will sustainable across the balance of 2020 and into 2021 and beyond?
IG Group shares traded up to 812p on Thursday but have subsequently fallen back to 772.520p at the time of writing.
Suggesting that the market feels it may be better to travel than to arrive
The analyst’s consensus price target for the stock is 792p. However, RBC has retained its 860p price target and there are currently 4 buy and 2 hold recommendations on the stock, from the six brokers that research them. We will watch this space with keen interest as always.
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.