Citi Thinks FXCM Is Still Worth $0.75

Citi commented on FXCM Inc FXCM Friday following its Q4 results, which included adjusted EPS of $0.20 adjusted versus an expected $0.15.

Analyst William R. Katz maintained a Sell rating on the stock with a $0.75 price target and said the company's equity value was "effectively zero even as management reconstitutes [the] business" once again.

While the company intended to repay its loan from Leucadia sooner than expected via asset sales, Katz did "not think it changes the ultimate economic reality around little residual value for equity holders given the onerous terms (including [a] claim on distributions and sale proceeds) of the rescue financing following the EUR/CHF depegging."

Related Link: FXCM Surges Off Q4 Earnings Beat

Katz added that it was difficult to model earnings because of a changing client base, a re-focusing on small retail FX clients and "the fair value accounting which will run through the P&L to account for the debt and economic rights given to Leucadia."

The firm expected an adjusted EPS (loss) for 2015 of $(0.05) and adjusted EPS of $0.03 in 2016. For 2017, the firm estimated adjusted EPS at $0.08.

The analyst concluded there was "little economic value remaining" following asset sales of approximately $300 million to satisfy debt and noted that "another strategy re-jiggering" had taken place with the exiting of institutional and market making businesses.

FXCM recently traded at $2.75, up 27.9 percent.

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