Following Quarterly Results, Analyst Explains How Rate Hikes Could Impact Interactive Brokers In 2022

Interactive Brokers Group Inc IBKR announced quarterly results that were in line with or slightly below consensus estimates, but the company's results beat the forecasts from Piper Sandler.

Piper Sandler's Assessment: Interactive Brokers reported quarterly adjusted earnings of 83 cents per share, which was in line with consensus estimates, but beat the Piper Sandler estimate of 79 cents per share. The company reported adjusted net revenue of $683 million, which was $22 million above the analyst firm's estimates.

Piper Sandler analyst Richard Repetto now expects Interactive Brokers to benefit from the anticipated rate hikes in 2022 slightly more than previously expected.

"Its sensitivity has and could continue to increase with the growth of margin loans and meaningfully expand if the company deployed or altered its conservative investment strategy," he said.

Related Link: Interactive Brokers' Thomas Peterffy Weighs In On Q4 Results, Robinhood Competition

The Piper Sandler analyst highlighted that Interactive Brokers founder and chairman Thomas Peterffy believes the company can "consistently sustain" 30% to 40% growth of new accounts long-term.

Repetto noted that the company's revenues are dependent on trading volumes and customer balances. The analyst warns that Peterffy "has a substantial controlling stake of IBKR and could be a risk if his interests are not in alignment with other shareholders."

Piper Sandler has an Overweight rating on Interactive Brokers with a price target of $100.

IBKR Price Action: Interactive Brokers has traded as low as $58.84 and as high as $82.82 over a 52-week period.

The stock was up 0.56% at $72.33 at time of publication.

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