CMC Markets FY income to beat market expectations

Online trading platform CMC Markets said on Tuesday that full-year net operating income is set to be ahead of market consensus amid "heightened" trading activity.

In an unscheduled update for the period from 1 January to 28 February, the company said the fourth quarter of 2020 had started well and performance across the business remained "strong".

"The underlying net operating income performance has continued to maintain momentum throughout Q4 2020, and the retention of client income continues to be higher than H1 2020," it said. "In addition, the recent market conditions experienced have seen heightened trading activity amongst CMC's clients over and above the strong performance delivered to date."

As a result, net operating income for the year to the end of March 2020 will be ahead of consensus estimates of between £199.0m and £202.3m.

Chief executive officer Peter Cruddas said: "I am delighted that CMC's strategy of targeting and retaining higher valued clients and our diversifying revenue base, alongside our ongoing success in retaining a higher percentage of client income, has continued to yield positive underlying performance throughout the second half of the year."

At 0910 GMT, the shares were up 12% at 171.64p.

RBC Capital Markets said: "Whilst higher market volatility does not always translate in to better trading for CFD providers, we expect the narrative created by the escalating situation around COVID-19 will have provided fertile conditions as: 1) existing CMC clients trade more, 2) old client reactive accounts, and 3) new clients are attracted."

RBC, which rates CMC Markets at ‘outperform’, lifted its price target to 195p from 170p.