Barclays reinstates coverage of IG Group after surge in trading

Barclays has reinstated its coverage of IG Group with an ‘overweight’ recommendation, after the online trading platform reported bumper trading.

The bank, which has a price target of 860p on the FTSE 250 stock, pointed to a spike in revenues in the fourth quarter, after widespread market volatility following the coronavirus outbreak boosted trading volumes.

Revenue for the first 36 trading days of the quarter was £173m, compared to the £52m in the first 12 trading days. It also signed up 22,500 new over-the-counter clients during the quarter, compared to 36,000 during the previous three quarters combined.

“This implies an acceleration in revenue per day to around £5m in the most recent 24 days,” Barclays said. “It is clearly tough to predict the levels of volatility over the rest of the quarter, and any client fatigue, so we assume that trading reverts to ‘normal’ levels. Around £2m per day, with 25 days remaining the quarter, equals £50m additional revenue.

“This takes fourth quarter revenue to £223m, and full-year 2020 estimated revenue to £613m. Alongside modestly raised cost guidance, we project 2020 pre-tax profits at £266m, 26% higher than previously published estimates.”

The positive trading update, coupled with stock updates, saw IG’s share price jump 3% to 758.50p by 1530 BST