Broker snap: IG's progress depends on the US

10th Dec 2010 12:30

While many of IG Group's markets have extended growth, finnCap thinks the key markets in terms of achieving earnings upgrades are Japan and the US.The spread-betting company's pre-close revenue guidance released Thursday is line with the broker's expectations with UK revenue rising by 4%, Australia by 3.6% and Europe by 24%.However, finnCap highlights that the group's operations in Japan "struggled with regulatory change and a goodwill impairment has become unavoidable."Japanese revenues are now likely to run at one third of pre-acquisition levels, and the broker says that the goodwill element of the £117m acquisition of 87.5% of forex trading and CFD provider FXOnline "needs to be reviewed."Additionally, following the regulatory approval for US retail-orientated exchange Nadex, analyst Duncan Hall says the next 12 months therefore "become important as to the rate of uptake but IG is confident that its products are attractive relative to over-the-counter FX trading". The broker retains its target price of 520p "leaving the shares a 'hold' at current levels, pending US progress for 2012".