Interactive Brokers Group’s (IBKR) first quarter 2010 earnings were substantially short of the Zacks Consensus Estimate. Earnings were also down from the prior-year quarter.
The results declined due primarily to competitive pressure on spreads as a result of constrained liquidity and other market challenges. Dwindling equity market volatility in the past quarters continues to negatively impact the results of its Market Making segment.
Though Interactive’s fundamentals remain strong with a highly liquid balance sheet, strong capital position and high barriers to entry, significant international exposure and increased market risk could impact profitability in the upcoming quarters. Hence, we are maintaining an Underperform rating on the stock.Zacks Investment Research
