Deutsche Bank Initiates BGC Partners (BGCP) with a Buy
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Deutsche Bank initiates coverage on BGC Partners (NASDAQ: BGCP) with a Buy rating and a $13 price target.
The firm said, "BGC Partners is an inter-dealer broker, serving the largest investment banks globally through a network of brokers in the rates, CDS and f/x markets. The firm looks to expand margins by helping brokers become more productive (in some cases with technology). Top line growth should come from higher revenue per broker and expansion into new markets via acquisitions. We expect top-line growth and margin expansion to lead to 20% EPS growth over the next two years, and given a valuation below peers and dividend yield support."
In the short-term, the firm looks for BCG to get revenue from newly hired brokers as they hit their stride in terms of productivity. In the medium-term, Deutsche believes BCG will acquire smaller firms and help newly acquired brokers expand their distribution through BCG’s existing relationships. Finally, in the long-term, the firm believes BGC will to try to leverage the legacy eSpeed technology to make brokers more productive and to improve the capture of commissions as products are increasingly traded electronically.
BGC Partners develops and deploys electronic marketplaces and related trading technology.
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Comments
DEUTSCHE and BGCP
I would be more confident of Deutsche's "BUY" advice had I not recalled that they underwrote the BGCP float. I am sure that the analysts at Deutsche wouldn't have known how much of the stock remained in Deutsche's hands: But it would be reassuring if Deutsche could tell the rest of us!
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BGC
Ed Teacher on Jun 18, 2008 06:52 PMThank the lord for Chinese walls. Clearly nobody at Deutsche told their client of their extraordinary faith [$13 !?] in the company. Heck! Howard Lutnick sold off $30m worth of shares last week at $7.72.