On Thursday, KeyBanc Capital Markets adjusted its outlook on Robinhood Markets (NASDAQ:HOOD), increasing the stock's price target to $47.00, up from the previous $30.00, while retaining an Overweight rating. The stock, currently trading at $40, has delivered an impressive 214% return year-to-date, according to InvestingPro data. The revision follows the brokerage firm's attendance at Robinhood's first investor day on December 4, where management presented the company's strategic plan for the coming decade and discussed near-term product and geographical priorities.
During the event, Robinhood's management provided insights into the platform's financial trajectory, hinting at double-digit revenue growth and earnings per share (EPS) expansion over time. The company has already demonstrated strong growth momentum, with InvestingPro data showing a 35.7% revenue increase in the last twelve months to $2.4 billion, while maintaining a healthy 86.5% gross profit margin.
also noted that expense growth is projected to stay below revenue growth, including low single-digit core expense growth. The management team's presentation highlighted the vast addressable market for Robinhood, estimated at over $600 billion, with approximately 40-50% currently serviceable and more than half of that segment considered emerging.
The KeyBanc analyst cited several key points from the investor day, including the company's product development pace and the team's confidence in operating efficiently, particularly in marketing. These factors contributed to the decision to raise the price target. The new target is based on a 27.1x multiple of Robinhood's projected 2025 EBITDA, reflecting higher estimates and the platform's increasingly attractive business model and customer cohort characteristics.
KeyBanc expressed a stronger conviction in Robinhood's asset and revenue growth momentum. Additionally, the analyst anticipates that a more relaxed regulatory environment could create a more favorable operating landscape for the company. Despite the higher valuation requiring more discussion, KeyBanc's outlook on Robinhood is positive, supported by the platform's strategic direction and growth potential.
According to InvestingPro, analyst price targets currently range from $20 to $55, with 12 additional ProTips available for subscribers looking to make informed investment decisions.
In other recent news, Robinhood Markets has seen a rise in its financial performance, with Q3 2024 revenues increasing by 36% year-over-year to $637 million and adjusted EBITDA nearly doubling to $268 million. The company made a significant acquisition, TradePMR, valued at $300 million, adding $40 billion in assets under administration and over 1,000 Registered Investment Advisors. In analyst movements, Deutsche Bank (ETR:DBKGn) lifted its target for Robinhood to $42, citing better than expected November metrics, while Morgan Stanley (NYSE:MS) maintained an Overweight rating.
Other firms such as Piper Sandler and Bernstein also raised their price targets for Robinhood, reflecting potential for further growth in the cryptocurrency sector. Additionally, Robinhood has launched new trading products like Index Options and Futures, and is planning to introduce futures trading in early 2025. The company has also expanded its cryptocurrency offerings to 20 tokens and is exploring opportunities in institutional and international exchange markets.
In recent developments, Robinhood's November 2024 operating data showed a significant increase in Funded Customers and Assets Under Custody, with customer Net Deposits exceeding $5 billion in November. Equity Notional Trading Volumes for November were over $145 billion, marking an increase of over 15% from the previous month. Lastly, Robinhood's chief legal and compliance officer, Dan Gallagher, is being considered for the chair of the Securities and Exchange Commission in the upcoming administration.
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