FDP is listed on AIM, with a 20m m/cap at 165p. IMO it's likely to earn 15p+ EPS this year to Feb'07, having made 6.9p EPS in H1, not only beating this year's but next year's broker forecasts.

The resulting current year P/E of just 11 is therefore far too low imo. FDP should if anything, given its track record and prospects, be trading on a P/E of around 15 times next year's forecast of, say, 17p EPS, giving a 255p price target.

Web site : http://www.firstderivatives.com/pages/home.asp

First Derivatives delivers computing/algorithmic solutions and support services in respect of derivatives, investment banking, fund management, insurance and financial/mathematical modelling. It also has its own range of e-business applications developed in-house and marketed/distributed effectively free of charge by BT - this business is also now delivering profits.

Its clients include some the world's most respected, wealthiest and free-spending financial institutions. For example, FDP deals with most of the top 10 investment banks in the world:

http://preview.tinyurl.com/ycwq9o
"JP Morgan, London,Dresdner Kleinwort Wasserstein, London,Lehman Bros, London & New York,Merrill Lynch, London & New York,Deutsche Bank, London,Fidelity, Boston,Bank of America, New York,CIBC, New York,Swedbank, Stockholm
Svenska Handelsbanken, Stockholm"

And:
""Software sales to 8 out of 10 top tier investment banks and many hedge funds
Over 50 customers worldwide growing at rate of 10 per year""

The hugely impressive adjusted EPS record is as follows:

Actual:
28/2/03 : EPS 2.4p, no divi, pre-tax profit 406,000
28/2/04 : EPS 4.8p, Divi 1p, pre tax profit 757,000
28/2/05 : EPS 6.1p, Divi 1.46p, pre tax profit 991,000
28/2/06 : EPS 10p, Divi 3p, pre-tax profit 1,720,000
28/2/07 : EPS 17.5p, Divi 5p, pre-tax profit 2,232,000
Goodbody stockbroker's forecasts are:
28/2/08 : old EPS 17.8p, Divi 5.7p forecasts now likely to be heavily upgraded

FDP is and has been continuously profitable, is expanding its blue-chip client list and has opened offices abroad in New York, Stockholm as well as London.

Here's Hemscott's recent coverage of FDP dated 9th May 2006 in which they conclude:
http://www.hemscott.com/news/comment-archive/item.do?id=7300
"House broker Corporate Synergy points out that 70% of sales forecast for the current year have already been secured and analyst Amisha Davda has upgrade forecasts for the current year from 1.8m to 2.2m for profits and from 6.5m to 8m in sales. These forecasts are described as 'arguably prudent'. . The figures show FD on a PE of only 10.8 times forecast earnings for the current 12 months falling to 9.8 times next year."

FDP will also benefit from 2006 onwards from the necessity for its hugely wealthy investment banking clientele to comply with the newly introduced MIFID rules. This could be bonanza time for consultants like FDP. Note the spend here - 50m from the heavyweight investment banks (most of whom are FDP's clients), and note the final paragraph about where it will be spent. This is FDP's precise domain. Recently the FDP director Michael O'Neill said:

http://www.tradersmagazine.com/magazine2.cfm?id=1&aid=2589&year=2006

""Reg NMS in the U.S. and MiFID in Europe are fantastic news for us," says O'Neill, since they will fuel the need for traders to manage and analyze larger volumes of data."

http://www.timesonline.co.uk/newspaper/0,,175-2470698,00.html
Extracts:
"New rules from EU will cost City 1bn - just for starters
Patrick Hosking, Banking and Finance Editor

Regulator gauges outlays on MiFID

City regulators yesterday put a figure on the cost to City firms of implementing the latest reforms from Brussels an upfront hit of about 1 billion plus continuing expenses of about 100 million a year."

"The biggest City banks are budgeting to spend as much as 50 million on computer systems, consultancy and extra compliance staff to meet the new regime."

"Categorising investors, proving trades are executed at the best price and instantly publishing information on equity trade volumes and prices would also load heavy upfront costs on some firms."

In addition, the Times had a recent article about Reuters' results showing the way the City is going:

http://www.timesonline.co.uk/newspaper/0,,173-2410787,00.html

"Reuters is preparing for a big shift in City employment, in which it expects banks to shed many dealer jobs in favour of using computers to conduct trading."

Algorithmic/computerised trading is where it's at worldwide, and FDP is in the sweet spot.

FDP also has some hidden assets which most are unaware of. It owns 4% of Kx, which could be worth a considerable sum (maybe 500k+?). Secondly, it owns a number of properties in London, New York and elsewhere which in early 2005 the broker said (from memory) were worth 750k over book value - a year on and they should be worth considerably more.

FDP also had 860k of cash at the 31/8/06 interims, and paid a maiden 1.4p divi - which suggests a 4.2p total divi for the year, well above the 3.5p broker forecast:
http://www.investegate.co.uk/Article.aspx?id=200609260700444531J

DYOR etc.

Check out this interview with Brian Conlon the CEO of First Derivatives.

Its worth a click:
http://www.brrmedia.co.uk/event/98281/brian-conlon-chief-executive-officer