Plus500 shares fell 4% to 3,294p on Friday, but the slide owed more to IG Group's earlier warning than to Plus500's own update.
The online trading platform issued a short, unscheduled statement confirming that first-half momentum had carried into the third quarter.
It is trading in line with market expectations for the full year and retains a strong cash position.
Cavendish reiterated its 'buy' rating and 4,490p price target, which now sits about 36% above the share price.
Analysts Rahim Karim and Jens Ehrenberg expect investors to take the update well, given worries about read-across from its larger rival.
The shares have lost almost a third of their value over the past three months.
Fuller numbers due
Plus500 will publish a more detailed third-quarter update later in October.
Cavendish has pencilled in quarterly revenue of $196 million and EBITDA (earnings before interest, tax, depreciation and amortisation) of $83 million.
It expects 25,000 new customers and 126,000 active customers.
Full-year forecasts stand at $850 million of revenue and $351 million of EBITDA.
Room for bigger returns
The broker expects Plus500 to end the year with $730 million of net cash after paying its 2025 final and 2026 interim dividends.
It models $352 million of shareholder returns this year, equal to 110% of net income.
Cavendish sees scope for more, given an average payout of 125% over the past three years.
A new buyback linked to second-half performance should follow once the $100 million programme announced with the interim results is complete.
Cash of $861 million sits well above the group's $550 million capital requirement.
The price target rests on a discounted cash flow valuation.
Cavendish believes the market is undervaluing the core contracts for difference (CFD) business, which lets clients bet on price moves without owning the underlying asset.
Progress in futures and targeted acquisitions could add further upside.
