JP Morgan Lowers PT On Investment Technology Group Following In-Line Quarter

Investment Technology Group ITG reported what we consider to be a very in-line quarter. Acquisition of Majestic helped in a variety of ways in 1Q, including YoY growth in revenue, and increase in capture rate, as promised. In that sense, expectations should have been met as they did. However, according to JP Morgan industry trading volumes were uninspiring in 1Q11 and have slowed meaningfully in 2Q. Volume growth in 1Q was reasonably good with numbers up 9.2% YoY. ITG took some more market share, which JP Morgan estimates increased from 2.85% to 2.99%. International revenue was up about 6% YoY, although a positive FX impact drove some of the growth. While 1Q was generally solid, 2Q volumes for the industry have started slowly. US volumes are down more than 10% versus 1Q levels and volume in Europe and Asia are off 0%-30% depending on the region. Even with market share gains, volumes need to stage a big recovery; else ITG EPS is likely to fall sequentially. JP Morgan has a $16.50 PT and Neutral rating on ITG Investment Technology Group closed Thursday at $15.97