FXCM closes at all-time low following KBW price target cut to $1

After we reported mid-week that its shares had dropped 19% since Q1 results were released on Friday May 8, shares of retail forex broker FXCM Inc (NYSE:FXCM) continued their freefall Thursday and Friday following a report by investment bank Keefe, Bruyette & Woods (KBW) setting a $1 price target on the company.

FXCM shares dropped 9% on Thursday and then another 9% Friday to close at $1.45 – its lowest ever closing price. But according to KBW analysts, the shares might be headed even lower.

KBW equity analysts Niamh Alexander and Kyle Voigt noted that FXCM’s reported Q1 revenues of $98 million missed the firm’s expectation of $107 million.

KBW noted that Q1 was a “noisy quarter” including the infamous January 15 Swiss Franc spike, but did mention that the remaining core of the business was “holding relatively steady.”

The analysts made the price target cut as a result of seeing more information on what assets are being sold, and what is expected to remain within FXCM as continuing operations.

FXCM share price May 15

FXCM share price past three months. Source: Google Finance.

KBW’s report stated:

Within the continuing operations, while customer accounts and activity levels appear to be holding up, the rate capture of $67 per million was below the $70 we had expected. Management expects rate capture to rise as it shifts more into CFD (contract-for-difference) business and moves more into principal based vs. agency trading with clients.

The firm’s 2015 EPS estimate was changed from (-$2.32) to (-$2.93) and the 2016 EPS estimates was cut from $0.61 to $0.33. The firm’s estimated Q2 2015 Loss Per Share was ($-0.10).

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