KBW: FXCM Is Worth $1/Share

Keefe, Bruyette & Woods cut its price target Wednesday on FXCM Inc FXCM from $1.50 to $1 and maintained an Underperform rating.

Analysts Niamh Alexander and Kyle Voigt noted that the company reported Q1 revenues of $98 million and missed the firm’s expectation of $107 million.

According to FXCM, it earned an adjusted EBITDA of $14.5 million in 1Q15 on continued operations and reduced the debt owed to Leucadia from $300 million to $228 million. The company maintained the goal of paying off the loan by the end of 2015, depending on asset sales.

Alexander wrote that Q1 was a “noisy quarter” although the remaining core of the business was “holding relatively steady.”

The analysts added that the “distressed financing in January also resulted in the reclassification of several subsidiaries to held-for-sale as discontinued items, goodwill write downs, writing down tax liabilities (based on revised valuation) and adding the liabilities to Leucadia on the balance sheet.”

The analysts made the price target cut as a result of seeing more information on what assets are being sold and what will comprise the remaining operations.

“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,” according to Alexander.

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).

FXCM recently traded at $1.60, down 8.8 percent ($0.15).