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UBS Adjusts Target Stock Price for Intermediate Capital Group
Asserting its confidence in the strong financial course of the Intermediate Capital Group (ICP:LN) (OTC: ICGUF), UBS raised its target stock value, moving from GBP19.50 to GBP22.50 this Monday. UBS didn't alter its 'Buy' recommendation for the stock, a verdict that nods to the company's impressive growth essence and bright future prospects.
Consistent Performance and Noteworthy AUM Growth
The significant rise in the Third-Party Assets Under Management (AUM) of Intermediate Capital Group, from $47 billion in March 2020 to an impressive $83 billion by December 2023, is noteworthy. UBS presumes that this ascending growth trend will continue by factoring in several key elements. The anticipation is for the flagship funds to stretch beyond the $10 billion mark within one to two vintages for Europe and SDP and within three for Strategic Equity.
Expansion of Strategies and Customer Base
There has been a remarkable expansion of investible strategies over the past ten years at Intermediate Capital Group, doubling to a commendable total of 16. This diversification creates an extensive platform for future growth. The expansion of the customer base from merely 69 in March 2012 to a significant 662 by September 2023 demonstrates an enlarging client pool.
UBS implies that Intermediate Capital is perfectly placed to command a larger piece of client funds across a more diverse range of strategies and larger-sized funds, without significant increases in staff numbers or platform operation costs.
UBS’s Upward Forecast for the Future
UBS projects that the operating margin for the Fund Management Company (FMC (NYSE:FMC)) will expand from a solid 55% to a robust 60% over the medium term. This forecast integrates a more bullish fundraising potential for Intermediate Capital, resulting in an elevated FMC valuation multiple.
Subsequently, UBS’s forecasts for earnings for FY25E-27E have undergone an adjustment with an increase from 2-13%, and the DCF & SOP price target has received a 15% uplift, rising from 1950p to 2250p.
