Investing.com -- Robinhood's path ahead for per-share income growth is "durable" thanks in part to solid net deposits, "significant" operating leverage and "strong" free cash flow generation, according to analysts at Wolfe Research.
In a note on Wednesday upgrading their rating of the stock to "Outperform" from "Peer Perform," the analysts said they were becoming "more constructive" on the trading platform operator following a dinner with Chief Financial Officer Jason Warnick.
They added that their concerns over Robinhood (NASDAQ:HOOD)'s profitability, retail performance indicators, and potential regulatory issues have been "adequately de-risked."
As a result, the analysts backed their forecast for the company's 2026 unadjusted earnings per share (EPS) to be roughly $1, about 70% above Wall Street consensus expectations of $0.56. They set a price target of $29 for Robinhood shares, implying a 31% upside to the Tuesday closing price of $22.14.
"Our confidence in [Robinhood]’s EPS growth algorithm is reinforced by the firm’s best-in-class incremental margin profile, with our modeled estimates suggesting that [Robinhood] can double GAAP EPS from 2024 to 2026," the Wolfe Research analysts wrote.
In May, Robinhood reported first-quarter profit per share of $0.18, surpassing consensus projections of $0.05. Net revenues came in at $618 million, exceeding forecasts of $543.14 million.