Robinhood Not Going Away: Analysts Remain Bullish Long-Term With Lowered Price Targets Post Q1

Financial services and stock brokerage Robinhood Markets HOOD reported quarterly earnings Thursday after market close. A revenue and EPS miss has led to several analysts lowering their price targets on the stock. Here’s what analysts had to say.

The Robinhood Analysts: JMP analyst Devin Ryan has a Market Outperform rating on Robinhood and lowers the price target from $41 to $36.

Rosenblatt analyst Sean Horgan has a Buy rating and lowers the price target from $15 to $12.

KeyBanc analyst Josh Beck has an Overweight rating and lowers the price target from $15 to $12.

Related Link: Robinhood Q1 Earnings Highlights: EPS And Revenue Miss, Monthly Active Users Fall, Company Remains Optimistic Of New Features

The Analyst Takeaways: Ryan called the recent quarter “another difficult quarter” for Robinhood. The analyst sees patience paying off for investors over the long run.

“In the first half of the last year, clearly the pendulum of retail engagement swung out positively far more than we would characterize as normal, and on the other hand, heading into the tail-end of last year through the beginning of this year, that pendulum has swung back through equilibrium to a more extreme negative position,” Ryan said.

Ryan noted that Robinhood is still in the early innings and has a strong long-term plan, with recent announcements bringing incremental revenue streams in the future. The analyst also notes that Robinhood has around $7 per share in cash, making the stock trade only $2 above its cash position.

In an updated note to clients, Horgan says “Robinhood is not going away” and suggests a strong future ahead.

“We now face the reality that HOOD is an extremely undervalued stock for those with long-term investment horizons,” Horgan said.

Horgan calls the current $10 share price a high-risk/high-reward investment opportunity.

Higher EBITDA could happen for Robinhood with a reduction in its workforce, Beck notes. The analyst also sees product innovation being a key to an investment in the company.

“Product innovation was a notable strength and leaves us positive on the Company’s ability to expand ARPU and keeps us Overweight,” Beck said.

Beck highlights new product launches of Robinhood Cash Card, extended trading hours, stock lending and the continued rollout of crypto wallets.

“The Company is taking a more cost disciplined approach to streamline recent rapid growth while also enabling further product and geographic progress.”

Price Action: Robinhood shares closed at $9.87 on Friday, versus a 52-week range of $9.00 to $85.00, according to Benzinga Pro.

Photo: Courtesy of Diverse Stock Photos on Flickr