Analyst Predicts Strong Earnings For Brokers Amid Solid Retail Engagement: Virtu Financial, Robinhood, And BlackRock Under The Spotlight

BofA Securities analyst Craig Siegenthaler forecasts the major earnings beats for brokers this earnings season, steered by accelerating retail engagement.

Siegenthaler also sees broad-based beats for traditional firms, supported by strong markets, foreign exchange, and higher management fees and non-operating income.

Here are a few of the most considerable companies, along with the analyst’s insights on them:

Virtu Financial, Inc. VIRT: The analyst reiterated a Buy rating on the stock, lowering the price forecast to $51 from $52.

The analyst revised their EPS estimates for the fourth quarter of 2024, FY25, and FY26 to $0.94, $3.58, and $3.71, respectively, from previous estimates of $0.88, $3.65, and $3.78.

The increase in the fourth quarter estimate is attributed to a surge in retail activity driven by the U.S. election and strong market returns since August, with several retail brokerages reaching multi-year volume records. However, the revisions were offset by a reduction in the company’s market share and capture, as intra-quarter disclosures indicated a significant drop in market share sequentially.

Additionally, the volatility environment is expected to reduce revenue per share. The analyst writes that once retail activity slows down, market share and monetization challenges could become a bigger issue for the stock.

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Robinhood Markets, Inc. HOOD: The analyst reiterated the Buy rating on the stock, raising the price forecast to $55 from $53. Siegenthaler notes that both Robinhood and Coinbase Global, Inc. COIN have benefited from the recent crypto bull market, with the total cryptocurrency market cap surpassing its 2021 high due to election results, hopes for a transparent regulatory framework, and a more dovish environment.

While acknowledging the high valuations in the space, the analyst remains bullish, citing accelerating earnings potential driven by factors such as a bullish market beta, increases in nominal client cash balances, higher demand for borrowing and capital markets activity, and higher-for-longer rates that limit NIM compression.

The analyst raised their HOOD adjusted EPS estimates for 4Q24, 2026, and 2027 to $0.42, $1.41, and $1.82, respectively, from $0.22, $1.35, and $1.75, due to higher client activity, especially in crypto volumes.

BlackRock, Inc. BLK: The analyst reiterated the Buy rating on the stock, raising the price forecast to $1,237 from $1,227.

The analyst estimates BlackRock’s long-term organic growth to be 5% in 2024, up from 3% in 2023.

Siegenthaler sees a re-acceleration in 2025, primarily driven by BlackRock’s leading bond ETF business, anticipating passive investments will capture 60-70% of the fixed income rebalancing wave.

Additionally, the analyst sees potential upside to the 4Q24 consensus EPS due to positive beta from management fees and increased performance fees, although from lower-quality items.

The analyst raised their 4Q24/2025/2026 EPS estimates to $11.76/$47.70/$54.18, up from $11.32/$47.27/$53.73, mainly due to positive market conditions (beta) and foreign exchange (FX) factors.

Price Action: VIRT shares are trading higher by 1.64% to $36.77 at last check Wednesday. HOOD shares are trading lower by 0.09% to $40.53, and BLK shares are trading higher by 0.23% to $983.03.

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