CMC Markets PLC (LSE:CMCX, FRA:T8Q)’s tech platform could transform the company into an investment giant, analysts at broker Peel Hunt suggest, as it widens its product offer and more third parties sign up to use its capabilities.
While the company is best known for its core contracts for difference (CFD) business directly with investors, it has started to offer its technology under white label partnerships, as seen with its contract with Australia and New Zealand Banking Group (ASX:ANZ) (ANZ).
House broker Peel Hunt said this was “almost the same as with Ocado”, which has enjoyed a transition from a grocery group to a tech company by selling its technology expertise to other companies.
CMC’s modular tech platform allows the traders to enjoy high levels of uptime during the most volatile times, which “has not gone unnoticed by other financial institutions looking to better serve their own clients too”, says analyst James Lockyer.
A soon-to-launch new iteration from CMC of a UK investment platform “should shift it further away from leveraged products and could potentially add GBP0.5bn in value”, Lockyer said.
“With more deals, we believe CMC Markets could rise to circa GBP2bn or 730p over time.”
However, in the short-term Peel Hunt cut its full-year earnings per share forecasts 47 and 34% for 2022 and 2023 after this month’s update gave guidance for net operating income to settle in a range between GBP250-280mln.
Having seen the shares fall by a third over September to a close of 275p on Tuesday, Lockyer said he believed the equity decline is “overdone” and set a share price target of 462p.