Numis upgrades NEX amid potential purchase by CME

Analysts at Numis upgraded their recommendation for shares of NEX Group on Friday from ‘hold’ to ‘add’, citing the possible purchase of NEX by US giant CME Group.

Inter-dealer broker NEX, formerly known as ICAP, received a preliminary approach from CME overnight and early stage talks between the two companies are ongoing regarding a purchase which Numis analysts said was "expected to be at a premium to the current share price".

While awaiting "further developments" and reflecting that premium, the broker also revised its target price for NEX to 800.00p, even as share prices rocketed up over 30% on Friday to 875.50p.

Its prior target price of 671p valued NEX's equity at £2.55bn.

The broker note continued to forecast sales growth of 8% by the end of the company’s financial year in March and further 7% growth for the 2019 financial year.

Dividends per share meanwhile were falling 71% to 11.3p for 2018 before bouncing back 30% to 14.7p the following year.

Analysts at Numis said: "We have previously highlighted that the company would make an appealing acquisition target as financial infrastructure continues to consolidate. We have mentioned LSE as being a strong candidate as a suitor, but other names could include Deutsche Borse, or Singapore’s SGX."

As of 1319 GMT, NEX Group’s shares were up 30.57% at 875.50p.