Shares in interdealer broker ICAP (LSE: IAP.L - news) , hit hard by a recent profit warning, rebound 7.1 percent after traders reassess the value of the company following a move by U.S. exchange operator Nasdaq to buy rival electronic Treasuries-trading platform eSpeed from BGC Partners (NYSE: BGCA - news) .
"ESpeed is one of the two primary electronic broking platforms for U.S. treasuries, the other being ICAP's BrokerTec platform, which we understand is the market leader," Shore Capital says in a note.
Shore Capital says by valuing BrokerTec on a similar revenue multiple to eSpeed (12 times) it implies the business is worth approximately 1.6 billion pounds -- equivalent to around three quarters of ICAP's current market capitalisation of approximately of 2 billion pounds.
"The read across from this deal is essentially positive for ICAP because it underscores the value inherent in its electronic broking assets ... As such, we remain positive on the shares and would use recent weakness as an entry point," Shore Capital says in note.
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