RBC says selloff on IG Group's Underdog deal was an overreaction

What Brokers Say Finance Written by: Ian Lyall 10:13 Wed 05 Aug 2026 --> Disclaimer No investment advice About this content Editorial Standards & Policies Share article About this content × About Ian Lyall Ian Lyall, a seasoned journalist and editor, brings over three decades of experience to his role as Managing Editor at Proactive. Overseeing Proactive's editorial and broadcast operations across six offices on three continents, Ian is responsible for quality control, editorial policy, and content production. He directs the creation of 50,000 pieces of real-time news, feature articles, and filmed interviews annually. Prior to Proactive, Ian helped lead the business output at the Daily... Read more About the publisher Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Use of technology Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. IG Group Holdings Plc ( LSE:IGG ) View Price & Profile RBC says selloff on IG Group's Underdog deal was an overreaction Published: 10:13 05 Aug 2026 BST RBC Capital Markets has backed IG Group Holdings Plc (LSE:IGG) after the sharp fall that greeted last month's acquisition of Underdog, arguing the market has fixated on regulatory risk while ignoring what underpins the deal. The broker keeps its outperform rating and 1,850p price target, implying 39% upside from 1,371p. RBC hosted chief executive Breon Corcoran, finance director Clifford Abrahams and head of investor relations Martin Price for a fireside chat following the announcement. Underdog is the only prediction market platform focused specifically on sport, setting it apart from the broader offerings at Robinhood, Polymarket and Kalshi, and it skews younger than online sportsbook customers. The deal lifts IG's US customer numbers tenfold and more than doubles US revenues, with daily fantasy sports and prediction markets accounting for around 25% of pro forma revenue. Management sees the price paid, roughly 2.4 times trailing revenues excluding contingent consideration and incentive payments, as attractive against the 10 times multiples reached by more established prediction market names. Around half the maximum value is contingent on earnings delivery, which RBC views as a structural hedge against the regulatory debate now running between state and federal authorities in the United States. Management expects that argument to reach the Supreme Court, with resolution inside 24 months, and believes Underdog can pivot to daily fantasy sports, sportsbook or financial products if prediction markets are constrained. The forthcoming NFL season is seen as a one-off customer acquisition opportunity, which implies heavier marketing spend in the second half before the focus shifts to profit from 2027. RBC forecasts adjusted earnings per share of 128p this year, putting the shares on 10.7 times, in line with the seven-year average. Continue reading