Highlights

  • Canaccord downgrades IG Group from Buy to Hold despite raising price target to 1,099p
  • Adjusted EPS projected to decline 16% year-on-year by FY27
  • Company refinanced £400m facility with £600m loan and issued £250m in fixed-rate notes

IG Group Holdings Plc (LSE: IGG) was downgraded by Canaccord Genuity from Buy to Hold on Friday, despite recent financial updates indicating performance above expectations for the fourth quarter of fiscal 2025 (Q425). The reassessment was attributed to uncertainties around market volatility and long-term earnings growth.

IG's recent trading update on May 12 revealed stronger-than-expected performance in Q425, with full-year results now anticipated to exceed consensus forecasts. The company's recent acquisition of Freetrade, completed on April 1, was also reported to have met internal performance expectations during the quarter.

In parallel with these operational updates, IG has made significant changes to its capital structure. The company refinanced its existing £400 million revolving credit facility, originally maturing in October 2026, with a new £600 million facility maturing in May 2030. Additionally, IG issued £250 million in fixed-rate notes, set to mature in October 2030.

Despite these moves and a positive trading environment recently fueled by increased market volatility, Canaccord expressed caution. The firm highlighted that volatility—a key driver for client acquisition and trading activity—is inherently unpredictable and may not persist. As a result, it modeled IG's earnings under more normalized market conditions and projected adjusted earnings per share (EPS) to decline by 16% year-on-year in FY27.

Canaccord also cited strategic concerns, noting that IG’s emphasis on dividends, buybacks, and M&A might support the share price temporarily but may not deliver sustained EPS growth. While Canaccord raised its price target on the stock from 782p to 1,099p, the downgrade reflects more measured long-term expectations amid a less predictable macro trading environment.