Robinhood Markets Inc
What Happened: Piper Sandler analyst Patrick Moley upgraded Robinhood from Neutral to Overweight on Monday and raised the price target from $20 to $23, noting that the recent pullback in shares has created an attractive buying opportunity. Robinhood stock is down about 23% over the past month, per Benzinga Pro.
"We think this pullback presents an attractive entry point into an innovative, fast growing brokerage platform," Moley said in a new note to clients.
The Piper Sandler analyst expects net interest income headwinds from future rate cuts to be largely offset by increased trading activity and margin loan growth. Moley also expects the company to benefit from the launch of a new web-based trading platform and the rollout of index options and futures trading later this year.
Piper Sandler expects Robinhood to benefit over the long term from global retail trading growth, a generational wealth transfer from baby boomers to their children, strong crypto positioning and international expansion.
BofA Securities reiterated a Buy rating on Robinhood and raised its price target from $28 to $32 following the company's "strong" second-quarter financial results.
Robinhood reported second-quarter results last week. Revenue of $682 million came in ahead of analyst estimates of $643.34 million, and adjusted earnings of 21 cents per share beat analyst estimates of 15 cents per share, according to Benzinga Pro.
Total revenue was up 40% year-over-year as transaction-based revenues jumped 69% year-over-year and net interest revenues climbed 22%. The number of funded customers grew by 1 million, reaching a total of 24.2 million.
"With the launch of index options and futures trading expected in 4Q24 as well as a desktop offering designed for active traders, we forecast a continued acceleration in client activity despite missing several key products that active traders value," BofA analysts said in a note to clients.
Although Robinhood is lacking some features including the ability to custody mutual funds, fixed income and CDs, BofA expects the company to continue to take share from competitors, citing competitive pricing, market tailwinds, a strong investor community and the platform's highly rated user experience.
BofA's price target of $32 is based on a 16-times multiple of Robinhood's estimated 2026 adjusted EBITDA.
HOOD Price Action: Robinhood shares were up 3.8% at $18.60 at the time of publication, according to Benzinga Pro.
