Fidessa Surges as Money Flows Into Equity Trading: London Mover

Fidessa Group Plc, a U.K. software developer for financial trading systems, rose the most in more than three years as increased equity trading boosts prospects of revenue growth next year.

The shares gained 8.8 percent, the biggest gain since June 2010, to 1,800 pence, the highest close in 18 months. Fidessa had the second-biggest advance on the FTSE All-Share Index.

Flat revenue and profit last year masked consolidation, restructuring and closures in its customer base that knocked 7 percentage points off growth, the London-based company said two days ago as it reported earnings. Chief Executive Officer Chris Aspinwall said that sentiment in the equity markets is now the best he has seen in five years.

“There has been a marked and positive change of sentiment in the market, with the weekly flow of funds into the equity markets reaching one of the highest levels ever recorded,” the CEO said in the earnings statement. “A floor will eventually be reached in the decline of equity markets which will allow our core end markets to gradually return to a more stable state.”

Stock turnover in Europe is increasing this year. The 50- day moving average of trading volumes on the Stoxx 600 Index moved above the 200-day moving average for the first time since July on Jan. 31, an event known as a “golden cross.”

Fidessa’s earnings results and outlook prompted Julian Yates, an analyst at Investec Plc, to raise his recommendation on the stock to buy from sell and to boost his 12-month price prediction to 1,850 pence from 1,110 pence.

Six Buys

Andrew Darley, an analyst at FinnCap Ltd., raised his recommendation to buy from hold and increased his price target 42 percent to 1,900 pence. Six analysts now rate the stock buy, according to data compiled by Bloomberg, while six have a hold recommendation and two say investors should sell.

The stock has gained 18 percent since Aspinwall’s comments, for the best three-day advance in four years. Even so, the improved sentiment has probably come too late to affect revenue this year, the CEO said.

Fidessa, whose clients include Citigroup Inc. and State Street Corp., has almost half its business in Europe, where global investment banks are cutting the most jobs. It gained business last year in Latin America and Asia, while North American revenue was virtually unchanged.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net

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