We update our model following IGG’s FY25 results. We make
minor increases to revenue estimates, which are more than offset by higher expenses at the PBT level.
However, our Cash EPS estimates increase by 2% & 7% in FY26/FY27, owing to the addition of share buybacks (both announced and forecast).
Our Price Target rises to GBP 1,275, and we reiterate our Outperform, Speculative Risk rating.
They make the following observations :
Model update moving parts
• Revenues: We increase total revenue by 4% in FY26/27. The largest driver
of this is the first time incorporation of Freetrade which we expect to add
£35m in FY26.
We also make minor increases to our OTC and tastytrade
estimates, which partially reflects commentary around improved income
retention in the OTC business.
• Costs: We increase adjusted operating expenses by 8% in FY26 and 7% in
FY27. This reflects the inclusion of Freetrade expenses, as well as higher
marketing and staff costs. We also incorporate increases to our gross
finance costs as a result of the £250m bond issued in May.
• Capital returns: We incorporate the announced £125m share buyback
into our FY26 estimates, and also forecast a further £100m of share
buybacks in FY27.
• Cash EPS and Price Target: These changes drive 2%/7% increases to our
FY26/27 cash EPS estimates, and we also introduce estimates for FY28.
Our Price Target rises to GBp 1,275 (from GBp 1,150)
The stock is unchanged on the day at £11.40 but up +5.46% over the last month
