7th Feb 2022 16:22
(Alliance News) - US investment bank Jefferies on Monday said it is raising its earnings forecast for Plus500 Ltd by as much as 15% after a recent favourable decision by the Israeli Tax Authority.
Even better for investors in the Haifa, Israel-based contracts-for-difference trading platform, Jefferies assumes the resulting tax savings will be returned via a special dividend.
Plus500 last month said its status as a preferred technological enterprise in Israel has been extended to 2026. For each year up to and including 2026, Plus500's corporation tax rate will be reduced from 23% to 12% and the withholding tax rate applicable for dividends will be reduced from 25% to 20%.
Plus500 was initially accredited as a preferred technological enterprise in 2020, at which time the company's corporate tax rates for 2017, 2018 and 2019 were reduced from 24% in 2017 and 23% for 2018 and 2019 to 12% in 2020.
Chief Executive David Zruia said back in January: "Plus500 was one of the first companies to receive the 'preferred technological enterprise' tax accreditation in 2020, delivering significant rebates and cash savings for the company and its shareholders, and helping to support on-going investment in our technology."
On Monday, Jefferies said it is modelling a 6% to 8% annual distribution yield - including both cash dividends and share buybacks - over its forecast horizon, which now extends out to financial 2024.
Back in January, before the tax decision, Plus500 said it was considering a new share buyback programme, following the completion of the USD12.6 million buyback scheme announced in October.
For 2021, Plus500 said revenue was estimated around USD718 million, supported by customer income - a key underlying growth metric - of USD702 million. The revenue figure is below the USD872.5 million posted in 2020, but higher than the company-compiled consensus analyst forecast of USD655.2 million at the time.
Earnings before interest, tax, depreciation and amortisation is expected to be around USD387 million for the year, down from USD515.9 million the year before.
Jefferies raised its discounted cash flow-based price target on the FTSE 250 stock to 2,100 pence from 2,000p and kept a 'buy' rating. Shares were trading at 1,464.00p on Monday afternoon, up 6.2% on the day.
Plus500 is due to report 2021 results on February 15.
By Tom Waite; [email protected]
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