Jefferies hikes Plus500 target price after results, buyback

(Sharecast News) - Markets gave a negative reaction to Plus500's annual results and share buyback announcement, but that didn't stop Jefferies from hiking its target price by nearly a fifth and reiterated a 'buy' recommendation. The online trading platform operator said it would return roughly $200m to shareholders via a share buyback and dividends, as it reported 2024 revenues had grown 6% to $768.3m, while underlying profits rose just 1% at $342.0m.

Nevertheless, shares were trading 4.2% lower at 2,745.08p by around midday on Tuesday, having dropped as much as 9% early on.

Jefferies said that it was tweaking its forecasts downwards after 2024 revenues beat estimates but profits missed slightly owing to higher costs. However, the broker said it believes there is upside risk to its projections for this year, "especially with the US business performing well".

"PLUS has remained on a c. 10x earnings multiple, despite giving the highest total shareholder returns of any stock over the period since its IPO in 2013. With revenues diversifying and an observable indicator of client activity in the US futures business, we think a higher multiple is justified," Jefferies said.

After accounting for an FX difference, the broker said a price-to-earnings multiple of 11 gives a 3,300p target price for the stock, up from 2,800p previously.