Credit Suisse Reiterates Underperform, Lowers PT On FXCM On 4Q14 Results And Business Update

In a report published Monday, Credit Suisse analyst Ashley N. Serrao reiterated an Underperform rating on

, but lowered the price target from $3.75 to $2.60. In the report, Credit Suisse noted, "Yesterday, after the close FXCM reported 4Q adjusted EPS of $0.20 (vs. CS: $0.18, FC: $0.17). The beat was primarily driven by strong institutional volume and pricing and lower expenses, mainly in advertising & marketing and communication and data processing. More importantly, management spoke to the resilience of the retail franchise (net new account additions are back to normal) and remains focused on growing the business with CFDs earmarked as the key near-term initiative. Strategically, management stated their intention to exit the institutional business and low margin/high capital retail FX jurisdictions (Hong Kong, Japan). Proceeds will be used to repay the majority of the Leucadia loan by the end of 2015–to this end management expressed confidence in their ability to repay $60 million of the loan by April 2016, having already paid $12 million. Recall if this payment is not made by April 16 the firm will incur an additional $30 million fee." FXCM closed on Friday at $2.58.