Plus500: Jefferies sees “material upside” to forecasts as it moves to ‘buy’ on stock in the online t

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Jefferies has upgraded its call on the shares of online trading group Plus500 PLC (LON:PLUS), citing scope for “material upside” to the company’s full-year 2020 earnings guidance.

The US broker pointed out that, after an exceptionally strong set of third-quarter earnings, the company opted to stick with the full-year consensus figures already in the market.

“This implied fourth-quarter revenue around the lowest level since the second quarter of 2014, which struck us highly conservative at the time, but particularly so following elevated retail equity market volumes in the wake of US election and potential Covid vaccine announcement,” Jefferies said.

“With little to suggest to us that customer trading performance has been unusually problematic, we see scope for a positive trading update to support earnings upgrades and multiple expansion.”

Its analysts have moved to ‘buy’ from ‘hold’ on the stock, raising their price target 30p a share higher to £17.60. At just after midday, the shares were marking time at £14.94.

Jefferies has increased its adjusted earnings per share estimate by 19% for 2020, reflecting the third-quarter results and “supportive fourth-quarter key performance indicators”.

Its full-year 2021 and 2022 forecasts “rise 10-13% reflecting higher revenue, on stronger growth in active users, and lower costs/normalised tax rate”.

The EPS estimates exclude a tax rebate of more than US$100mln which will be received “in FY20/21”, Jefferies said.

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