IG Group offers "good value" but Numis cuts estimates

17th Sep 2014 12:11

Numis Securities has kept an 'add' rating for spreadbetting group IG Group but has trimmed its forecasts after a poor first-quarter update from the firm.A particularly quiet summer in the financial markets and very low levels of volatility meant revenues at IG Group were down 9% year-on-year to £85.6m in the three months to 31 August.Furthermore, Numis said: "Since the period end it is our belief that volatility has improved but remains at a relatively low level."The broker said that due to current market conditions it is reducing its full-year revenue forecasts by 3% the year to May 2015 from £396m to £384m, compared with £372.5m the previous year."IG remains a growth business that we view as being similar to the tide coming in. Each new wave climbs up the beach but it also flows back from its peak with volatility determining how far up the beach each wave climbs and how far it retreats from that crest," Numis said.Nevertheless, it reckons that IG still offers "good value", trading at a historic price-to-earnings multiple of 14.8.The broker kept a 665p target price for the shares, which were trading down 5% at 573.5p on Wednesday afternoon.