Broker snap: Credit Suisse cuts target for IG

20th Jul 2011 12:01

Credit Suisse keeps its outperform rating on spread-betting firm IG Group (IGG), but slightly cuts the target price after factoring in lower growth estimates.The company said it generated £320m of revenue and £163m in pre-tax profit in the year ended 30 May, after accounting for a charge of £2.5m on the closure of the sports business, extrabet."Whilst IGG stated that June and July have started well, it is too early to extrapolate for the remainder of the year and we are more cautious on revenue growth given the continued challenging economic backdrop in a number of the countries in which IGG operates," said analysts Gurjit Kambo and Rupak Ghose.Due to a combination of lower revenue growth estimates (7%), the exclusion of extrabet and broadly constant earnings margins, the Swiss broker cuts its pre-tax profit forecasts for the year ending May 2012 by 4.8% to £175.2m. Earnings per share estimates are cut by 4.1% to 35.1p.As such, the target price falls to 530p, from 550p.Nevertheless, Credit Suisse says that the new price still offers a 22% upside to the current share price, resulting in the broker maintaining its positive stance.BC