Canaccord Genuity lifts CMC Markets price target ahead of results

(Sharecast News) - Canaccord Genuity lifted its price target on CMC Markets on Friday to 222p from 192p as it updated forecasts ahead of FY25 results on 5 June to reflect expected trading performance into the end of the year and market conditions in FY26 year to date. Canaccord said it expects that FY26 has started very strongly for the CFD trading business given the significant spike in volatility at the beginning of April.

Its adjusted diluted earnings per share forecasts are +17%/+61%/-4% versus current Bloomberg consensus in FY25/26/27, respectively. Canaccord said it doesn't appear that the consensus has yet adjusted to reflect recent market conditions.

"As we have written previously, the lack of disclosure at CMC compounds the challenge of forecasting an inherently volatile business model," it said. "We forecast a FY25-27 adjusted diluted EPS compound annual growth rate of -4%, with FY27 adj. dil. EPS the same as FY22."

Canaccord said the forecast dividend yield of 6% in FY26 falling to 5% in FY27 is not standout, and given the 50% payout policy is subject to volatility.

"The company is currently operating without a CFO and we understand has no plans to fill the role, which is a source of intrigue and concern for us," it said.

"Our long-held view for the CFD sector is to take profits when periods of high volatility deliver super-normal returns, and conversely buy when volatility is low.

"However, even in normal market conditions, give the concerns we have expressed we would rather look elsewhere than CMC for exposure to CFD/leveraged trading."

Canaccord maintained its 'sell' rating on the stock.