CMC Markets valuation too 'generous', says Canaccord Genuity

18th Jun 2024 13:35

(Sharecast News) - Analysts at Canaccord Genuity reiterated their 'sell' recommendation for shares of CMC Markets, arguing that their valuation was too "generous".

In particular, they noted the "extreme" volatility around the leveraged contribution in the Business-to-Business segment.

They also noted how their analysis had found a potential lack of consistency in the firm's hedging policy and approach to risk-taking.

The lack of transparency around the drivers of the spread better's leveraged income retention and the lack of clarity regarding its customer acquisition strategy added layers of complexity to the process of forecasting earnings that were driven by volatility and markets, they added.

The shares were changing hands on price-to-earnings multiples of 15.1 and 12.7 for the 2025 and 2026 fiscal years.

Nevertheless, their estimates for the company's profit before tax were 13% and 4% ahead of the consensus as per Refinitiv.