Knight Capital Makes Long-Term Earnings Targets

Knight Capital Group KCG hosted an investor day that presented long-term targets for revenues and earnings, according to Goldman Sachs. In the report, Goldman Sachs writes "KCG's target/goals for $1.9 bn in annual revenue by 2013 imply a 19% CAGR from our 2010 estimate for revenue, not dissimilar from the 19% growth rate from 2002-2009 at KCG, thus there is precedent though these levels appear to be a stretch, given 0% revenue growth in 2010. Specifically, fixed income is expected to grow at a 12% CAGR 2009-2012 (2010 trending to a decline of 7%), and equities is targeted to grow at 10% from 2009 levels (though 2010 is likely to be down 2% yoy). We applaud management's resolve, but stated goals appear lofty, given recent results, barring significant market recovery or M&A activity." Goldman Sachs maintains its Neutral rating and $14 price target. Knight Capital Group closed yesterday at $12.96.