CMC Markets upgraded as its mulls breakup, analysts eye significant underlying value

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Shares in CMC Markets PLC (LSE:CMCX) were up almost 7% mid-afternoon after it confirmed it was at the very early stages of “evaluating the merits” of a split of its retail and leveraged trading operations.


The American bank Jefferies made a “valuation-driven” upgrade of its stock recommendation to ‘buy’ from ‘hold’ in the wake of the confirmation from CMC.


Its price target is 330p, an 8% premium to the current share price. However, its “upside scenario” values the business at 550p, and the “downside scenario” at 170p a share.


London brokerage Peel Hunt reckons the stock is worth 462p. “At this point it is difficult to reach any conclusions about the outcome,” Peel said in a note to clients.


“However, we remain of the view that there is significant underlying value in the business that is not captured in the current EV/EBITDA multiple of six-times.”


Of the seven banks and brokerages logged as following CMC, four are positive on the stock; the other three hold ‘neutral’ recommendations. The consensus price target is 397p, a 44% premium to the current share price of 276.25p (up 6.6% on the day).

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