This Robinhood Analyst Raises Forecast By 17% On Retail Trading and Crypto Expansion - Here's Why

Robinhood Markets Inc HOOD stock is up after Piper Sandler analyst Patrick Moley maintained an Overweight rating and raised its price target from $23 to $27.

The re-rating follows the 50 bps Fed rate cut, with Moley reiterating that the second-order effects of Fed rate cuts on margin balance growth and overall retail trading activity will be enough to offset the negative impact of lower rates.

The price target reflects seven times the analyst’s 2026 revenue estimate (up from 6 times previously to reflect recent peer group multiple expansion and a more favorable retail trading environment).

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Moley said that Crypto accounted for ~16% of Robinhood Markets’ net revenues in the first half of 2024. While the stock has by far the most robust crypto offering of any traditional U.S. retail broker, its offering is pretty conservative compared to crypto-native firms like Coinbase Global, Inc COIN.

Moley noted that the passage of comprehensive crypto legislation in the U.S. is nearing. CME Group Inc CME and Coinbase CEOs believe comprehensive legislation could come before year-end.

The analyst said Robinhood Markets is well positioned to benefit if this occurs, given its relatively conservative crypto offering and a younger customer demographic with an appetite to adopt new crypto products.

Moley projects ~ a 10%-12% EPS upside to Robinhood Markets’ earnings if the company expands its crypto offering to something comparable to crypto-native peers.

Robinhood Stock Prediction For 2024

Robinhood Markets’s revenue growth in FY23 was 37.33%, reflecting the influence of various factors including the macroeconomic environment, demand for its products and services, and its position relative to competitors. This growth is a critical indicator for investors assessing the company’s future prospects.

Some macro factors that could impact the company's performance in the next year include higher interest rates, progress on reeling in inflation and labor market strength. The Fed's benchmark rate is currently at 5.33%, while PPI recently came in at 0.2%, growing 1.7% from last year. The unemployment rate was most recently reported as 4.2%.

An investor should pay attention to economic conditions to decide whether they think the macro environment is positive or negative for Robinhood Markets stock. For real time economic data and breaking market updates, check out Benzinga Pro. Try it for free.

How does this stack up against Robinhood Markets's peers?

Investors may also want to analyze a stock in comparison to companies with similar products or in similar industries. Robinhood Markets operates in the Financials sector. The stock has experienced average annual growth of -17.32% compared to the 10.93% average of its peer companies. This is below the broader sector movement of Robinhood Markets.

Price Action: HOOD stock is up 2.68% at $23.57 at last check Thursday.

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