We are downgrading our recommendation on Interactive Brokers Group (IBKR) to Underperform from Neutral based on its mediocre fourth-quarter 2010 results. Earnings for the reported quarter lagged the Zacks Consensus Estimate.
Though results benefited from lower non-interest expenses, they were more than offset by decrease in net revenue. Also, higher interest and compensation expenses were to the downside.
Though the company’s fundamentals remain strong with a liquid balance sheet, sturdy capital base and high barriers to entry, we believe that Interactive’s dependence on IBG LLC and increased market risk due to significant international exposure remain causes of concern in the near-to-medium term.
INTERACTIVE BRK (IBKR): Free Stock Analysis Report
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