Key Moments
- Deutsche Bank initiated coverage of IG Group with a “buy” rating and a 1,300p price target. They cited undervaluation relative to the company’s medium-term outlook.
- The bank forecasts through FY26-29 include annual revenue growth of 5%, EBIT growth of 6%, and EPS growth of 11%, alongside a 2% yearly dividend increase.
- Core OTC and exchange-traded derivatives businesses, plus surplus capital, are seen as underpinning current value, with additional upside from stock trading, crypto, and minority stakes.
Deutsche Bank Launches Coverage With Positive View
Deutsche Bank began covering IG Group with a “buy” recommendation and a 1,300p target price. The bank argues that the London-listed trading platform looks undervalued compared with its medium-term prospects.
Analyst David McCann leads the coverage. He described the stock as “cheap vs. the outlook” and highlighted strong core franchises. He also sees potential upside from newer business areas.
Forecasts Point to Steady Growth Through FY26-29
McCann stated that Deutsche Bank projects steady growth for IG Group over FY26-29. The growth will mainly come from its core operations and strong capital position.
According to the brokerage, revenue is projected to grow 5% per year over that period, compared with IG Group’s communicated goal of mid-to-high single-digit percentage growth.
EBIT should rise 6% annually, with margins staying mostly steady. Deutsche Bank notes this aligns with the company’s guidance.
EPS is forecast to grow 11% annually, partly due to share repurchases. Dividends are expected to increase 2% per year.
Valuation Metrics and Capital Return Potential
The projections assume a FY26 P/E of 10x, or 9x excluding surplus capital. The dividend yield is 4.2%.
McCann believes this valuation underestimates IG Group’s earnings potential. He also notes the balance sheet offers flexibility to support dividends and share buybacks.
| Metric | Deutsche Bank Forecast / View |
|---|---|
| Rating | “Buy” |
| Target price | 1,300p |
| Revenue growth (FY26-29) | 5% per year |
| EBIT growth (FY26-29) | 6% per year |
| EPS growth (FY26-29) | 11% per year |
| Dividend growth (FY26-29) | 2% per year |
| FY26 P/E multiple | 10x (9x excluding surplus capital) |
| Dividend yield | 4.2% |
Five Pillars of the Investment Case
Deutsche Bank highlighted five pillars supporting its IG Group investment thesis. These include OTC derivatives, exchange-traded derivatives, stock trading, crypto and related activities, and capital.
McCann said the core OTC and ETD businesses, combined with surplus capital, make up most of the value reflected in the current share price.
These elements drive the company’s ability to pay dividends, repurchase shares, and pursue acquisitions.
Upside From Stock Trading, Crypto, and Minority Stakes
Deutsche Bank said that the primary upside potential lies in IG Group’s stock-trading and crypto operations, along with other adjacent opportunities that it believes are not fully incorporated into the prevailing valuation.
The brokerage also drew attention to the group’s minority shareholdings in Payward, the owner of the Kraken crypto exchange, and Zero Hash, a digital-assets infrastructure platform.
McCann noted that these positions, when combined with IG Group’s established trading franchises, create “upside optionality” that could support additional shareholder value over time. However, he added that the current valuation already assumes limited contribution from these areas, reinforcing the view that the stock is underpinned by its existing businesses and capital base.
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