After a Seeking Alpha publication triggered a stark drop in share prices of FXCM, the company was hit by a couple of downgrades by major analysts covering the stock. The stock traded lower by over 15% on Friday after the news, but later stabilized around $1.48 per share which is still 7% lower on the day.
An analyst from Citigroup, William Katz, issued a note reiterating the tone of the article by VMK Investment Research. In his estimates the value of the stock should be around $0.80 which is another 41% downside from the stock’s opening price on Friday.
Keefe, Bruyette & Woods, a firm which regularly posts questions to FXCM’s executives during earnings calls has downgraded its price target to $1 from $1.50 per share. The analysts cited the earnings miss of company’s first quarter revenue. KBW estimated $107 million, which is almost 10% higher than the reported $98 million.
Raising a point about the safety of client funds, it’s worth mentioning that the capital base of the company remains well in excess of regulatory capital requirements. The credit risks for clients of FXCM remain minimal due to Leucadia’s lifeline totaling $300 million.
Shares of FXCM are presently trading more than 25% lower than before the publication of the report by activist investors from VMK.