Berenberg upgrades Plus500 after two positive updates
Berenberg upgraded its stance on shares of online trading platform Plus500 to ‘buy’ from ‘hold’ on Monday, hiking its price target following two positive updates in two weeks "while many other companies were issuing profit warnings".
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Plus500 Ltd (DI)
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It pointed in particular to the latest update last Monday, in which the group said 2020 results will be "substantially ahead of current consensus expectations".
"Current circumstances are obviously not normal but if Plus500 meets FY 2020E forecasts then it will return circa 12% (c100p) of its market cap to shareholders this year,” the bank said.
"Our estimate of the value of the business the following year yields our new price target of 860p (from 790p). There may be further upside if Plus500 can continue to perform as well in the rest of 2020 and can retain customers into next year. Considering its diversification benefits, cash generation and recent founder/director purchases, we upgrade Plus500 to buy."
Berenberg said the first quarter of 2020 will "likely easily be the best quarter for Plus500 since Q3 2018", when the European Securities and Markets Authority imposed restrictions on retail traders in Europe.
"It could, we think, be one of the company’s best-ever quarters. Upgrading guidance so early in the year suggests Plus500 has earned a significant proportion of its prior revenue estimate in Q1."
At 1410 GMT, the shares were 6.4% higher at 879.20p.