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On Friday, BofA Securities adjusted its outlook on Intermedia Capital Group (ICG:LN) (OTC: ICGUF), reducing the price target from GBP26.00 to GBP25.00, yet reaffirming a Buy rating on the stock. The research firm highlighted ICG's position as their preferred choice in the UK market, citing the company's valuation and its robust performance in private debt and secondaries sectors, which are anticipated to benefit from the current macroeconomic environment. According to InvestingPro data, ICG trades at a P/E ratio of 11.87x and has maintained dividend payments for an impressive 31 consecutive years, demonstrating long-term stability.
BofA Securities analysts pointed to several factors underpinning their positive stance on ICG. They anticipate that the company could significantly increase private debt deployment, leveraging its $14 billion in available capital, especially if banks pull back as they did during the COVID period. This potential for growth is further supported by the expectation of increased opportunities within the secondaries market, which comprises 20% of ICG's Assets Under Management (AUM) and is likely to expand due to investor liquidity needs. The company's strong liquidity position is evident in its current ratio of 1.96, with liquid assets well exceeding short-term obligations.
The analysts also noted ICG's lower reliance on performance fees, which constitute approximately 11% of Fund Management Company (FMC (NYSE:FMC)) revenues. This aspect is seen as a stabilizing factor for the company's revenue stream. Additionally, BofA Securities emphasized ICG's valuation, which is currently at a trough on a 10x FY26E Price Earnings (PE) ratio. They believe that the market is undervaluing ICG's balance sheet portfolio, overlooking the company's resilient performance throughout various market cycles. InvestingPro analysis reveals a "GOOD" overall financial health score, with particularly strong metrics in profitability and cash flow management. Get access to 6 more exclusive ProTips and comprehensive financial metrics with an InvestingPro subscription.
The BofA Securities team's commentary indicates a belief in ICG's capacity to navigate the present economic landscape effectively. Their analysis suggests that ICG is well-positioned to utilize its resources and capitalize on market dynamics that favor its business model, particularly in the realms of private debt and secondary investments.
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