Canaccord Genuity downgrades Plus500 to 'hold'

Analysts at Canaccord Genuity downgraded capital markets business Plus500 from 'speculative buy' to 'hold' on Thursday but hiked their target price on the stock from 1,883.0p to 2,650.0p ahead of the group's Q3 trading update on 28 October.

Canaccord Genuity said its key changes to Plus500's investment thesis involved customer income expectations being upgraded by 3% and full-year adjusted underlying earnings estimates being raised by 27% to $343.0m, aided by customer trading performance of $40.0m

The Canadian bank also said it now expects an 8% improvement in average user acquisition cost, as well as $210.0m of share buybacks in CY24.

Canaccord also updated its estimates for the current USD:GBP exchange rate, resulting in GBP earnings per share and dividend per share upgrades of 27% in CY24E, 10% in CY25E and 8% in CY26E.

"We shall review forecasts and outlook again post the Q324 trading update. We see scope for further market volatility in this calendar year given the UK Budget on 30 October 2024 and US Presidential election on 5 November 2024. Consequently, we believe the scope for further upside surprise is high," said Canaccord Genuity.

Reporting by Iain Gilbert at Sharecast.com