27th Mar 2024 12:15
(Alliance News) - The improved trading performance at CMC Markets PLC shows just how quickly fortunes can turn in this sort of business, Shore Capital analyst Vivek Raja said on Wednesday.
Shares in CMC Markets leapt 15% to 217.00 pence in London on Wednesday around noon.
In a trading update for the financial year ending March, the London-based online trading firm said it expects full-year net operating income to exceed the top end of the previously guided range of between GBP290 million and GBP310 million.
This would be up from GBP288.4 million in financial 2023.
Following the strong trading performance seen in the third quarter, the positive momentum continued in the fourth quarter, CMC said.
"We continue to see strength in the institutional and B2B business as the group benefits from the long-term investments in this area. The group also has a strong pipeline of B2B partnerships some of which are in the advanced stages," the company stated.
Operating costs, excluding variable remuneration and non-recurring items, are expected to be in line with guidance at around GBP240 million.
CMC said it continues to identify opportunities for further cost savings across the global business as it focuses on improving profit margins.
In January, CMC said it planned to cut around 200 jobs, some 17% of its total workforce, as part of a cost review that was announced in November last year.
"CMC has seen a sharp upgrade cycle in the past few months, the strength of which has caught us by surprise, emphasising the significant effect of operating leverage and how quickly fortunes can turn in this sort of business," said Raja.
"Today’s update suggests another significant upgrade to put through our forecasts: indicatively our prevailing FY24F adjusted pre-tax profit of GBP41 million could double," with "meaningful upgrades likely to flow through to FY25F reflecting a higher revenue baseline."
Raja said he would reappraise his current 170p fair value in the context of forecast movements.
By Jeremy Cutler, Alliance News reporter
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