Rosenblatt Securities Inc. analyst Chris Allen has upgraded Investment Technology Group Inc. to "buy" from "neutral," citing a stronger backdrop of trading volume in the U.S.
The company's U.S. segment is now approaching profitability thanks to lower expenses and better incremental margins, Allen wrote. ITG recorded strong results in the fourth quarter of 2017 in Europe and the Asia-Pacific region.
"We have been waiting some time for better U.S. trading activity and we clearly saw that in February," the analyst wrote. Though ITG's market share will be volatile on a monthly basis, Allen has "a much more positive outlook for the U.S. trading environment."
The analyst added that while ITG's management is willing to expand its businesses inorganically, he does not expect dealmaking in the near future as management waits to see how structural changes in trading alter the competitive environment.
The Rosenblatt Securities analyst's price target on the company is $23.
