Shares digital

Derivatives broker IG Group (IGG) is tipped to increase revenues almost seven-fold over the next eight years following overseas expansion. Analysts at independent broker Landsbanki predict sales from the financial business – Contracts for Difference (CFDs) and spread betting on financial markets – will hit £700 million by 2015.

The company generated £109.8 million from financial operations in 2007 which is by far the largest source of sales, accounting for around 90% of all revenues. These growth estimates factor in no contribution from the UK market (at present about about 80% of all financial's sales) and instead rest on further expansion into Europe and Asia.

Currently trading at 352p, shares in IG have come off sharply from their October high of 427p. Landsbanki's Katrina Preston blames the retreat on a negative reaction to start up costs relating to November's expansion into France and Spain. But, as the growth story becomes understood, Preston says the shares are in for a re-rating towards 450p.

While still a small part of the overall pie, revenues from CFD business in Europe are growing extremely fast. They came in at £11.8 million last year, up 126% on 2006. That growth followed new offices in Germany and a new Italian desk in London.

Shares says: Growth potential from expansion into Europe makes IG worth holding.

by: Simon Keane