Citi Sees 75% Downside On FXCM Shares

Citi affirmed its Sell rating and $0.75 price target on FXCM Inc (NYSE: FXCM) Friday.

Analyst William R. Katz saw a 75 percent downside to the stock and felt that its shares were being boosted by retail day-traders who may be looking at short-term technicals rather than the “significantly impaired equity value” of the company.

Katz believed “the residual value to shareholders is worth no greater than $0.60 to $0.85 per share” and thought that the market capitalization of the company, including the proceeds from Leucadia, should not exceed $1.2 billion.

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Put another way, Katz believed 95 percent of proceeds from a $1.33 billion sale would go to Leucadia and debt holders with 5 percent left over for FXCM shareholders.

“We believe the shares are trading at unsustainable levels and we expect the price to migrate toward our target price as investors work through the implications of the Leucadia financing,” Katz concluded.

FXCM recently traded at $2.73, down 11.9 percent.