On Tuesday, Morgan Stanley adjusted its outlook on Robinhood Markets (NASDAQ:HOOD), the popular brokerage platform, following the company's second-quarter earnings report. The firm increased its price target for Robinhood from $20.00 to $21.00, while maintaining an Equalweight rating on the stock.
The adjustment comes after Robinhood's second-quarter financial results, which prompted the analyst to revise upward the earnings per share (EPS) estimates for the coming quarters. The estimated EPS for the third quarter of 2024 was raised by 12 cents to $0.22, up from the previous estimate of $0.10. The full-year 2024 EPS forecast was also increased by 33 cents to $0.83, and the 2025 EPS projection was lifted by 21 cents to $0.68.
The raised price target and EPS estimates are attributed to Robinhood's better-than-expected Options transaction revenues and higher interest revenues. This improved financial performance is seen as a likely indicator of Robinhood's sustained shift to profitability.
The analyst cited Robinhood's focus on cost management and strong execution as key factors that instill more confidence in the company's financial outlook. As a result, Morgan Stanley has moved from a valuation range to a single point price target for Robinhood, reflecting a more certain view of the company's future performance.
In other recent news, Robinhood Markets Inc (NASDAQ:HOOD). has reported an impressive Q2 2024, with a 40% year-over-year revenue increase to $682 million and an unprecedented earnings per share (EPS) of $0.21. This performance was driven by record trading volumes and robust margin lending. BofA Securities has raised its price target for Robinhood from $28.00 to $32.00, maintaining a Buy rating. Piper Sandler has also upgraded the stock's rating to Overweight and increased its price target to $23.00.
The company's net deposits reached a new peak at $13 billion, indicating a 41% annual growth rate. In a move to diversify its portfolio, Robinhood has made strategic acquisitions, including global crypto exchange Bitstamp and AI company Pluto. The firm is also planning to introduce index options and futures trading, along with a new web-based trading platform.
These recent developments, including the anticipation of new product launches and international expansion efforts, are expected to contribute positively to Robinhood's future performance. Both BofA Securities and Piper Sandler have expressed confidence in the company's growth prospects and its ability to capitalize on these strategic initiatives.
InvestingPro Insights
As Robinhood Markets (NASDAQ:HOOD) continues to attract attention following its earnings report and Morgan Stanley's updated price target, insights from InvestingPro provide additional context for investors. The company's market capitalization currently stands at approximately $16.28 billion, reflecting investor sentiment and market reach. With a P/E ratio of 55.91 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at 56.13, Robinhood trades at a high earnings multiple, suggesting that investors may expect higher earnings growth in the future.
InvestingPro Tips indicate that analysts are optimistic about Robinhood's profitability, with net income expected to grow this year and three analysts having revised their earnings upwards for the upcoming period. This aligns with the positive adjustments in EPS estimates noted by Morgan Stanley. Moreover, the stock has experienced a significant return over the last week, with a price total return of 7.73%, and a notable return of 72.95% over the past year, highlighting its potential for short-term and long-term gains.
For investors seeking more in-depth analysis, additional InvestingPro Tips can be found at https://www.investing.com/pro/HOOD, which may further guide investment decisions regarding Robinhood Markets.
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