Keefe, Bruyette & Woods Downgrades FXCM, Stock Slips 5%

Keefe, Bruyette & Woods downgraded FXCM Inc FXCM this morning, noting that Friday's closing price of $2.58 is in the "midpoint of valuation range." As such, the company slapped an Underperform rating on the stock.

Related to Q4 earnings, KBW noted that the entire beat was due to lower expenses, predominantly with lower referring broker fees. Further, the analysts said that while retail account balances were flat since the January turmoil, activity with institutional customers was "down sharply in February."

FXCM's management is continuing its plan to sell its non-core assets, a list that KBW says is "quite long." KBW said it expects that sales could garner $250 million in freed up capital versus a debt of $300 million to Leucadia National Corp. LUK.

Critically, KBW is concerned that Leucadia has the option to force FXCM into a sale over the next three years, even if FXCM repays Leucadia's loan. That risk caused KBW to value the company on what the public shareholders would receive in such a sale – roughly $0.42 to $2.79.