HOOD Stock Rallies On Wall Street Optimism: Retail Sentiment Improves As Investors Eye A Bigger Pop
Scotiabank believes the market is pricing Robinhood as a cyclical retail broker, which it considers to be the wrong framework.
The analyst noted that Robinhood earns across transaction revenue, net interest, subscription, exchange and clearing economics, and international crypto infrastructure.
As per Koyfin data, HOOD stock has a 12-month average price target of $123.38, implying an upside of more than 15% from its last close.
Shares of Robinhood Markets Inc. (HOOD) closed up more than 3% on Wednesday and continued to climb overnight amid a series of Wall Street price target updates on the company.
Scotiabank initiated coverage of Robinhood with an ‘Outperform’ rating and $136 price target, implying an upside of more than 27% from its last close. Piper Sandler also hiked the company’s price target to $145 from $135, keeping an ‘Overweight’ rating on the stock.
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What’s Driving Price Target Hikes On HOOD?
Scotiabank said, as per The Fly, that it believes the market is pricing Robinhood as a cyclical retail broker, which it considers to be the wrong framework.
The analyst noted that Robinhood earns across transaction revenue, net interest, subscription, exchange and clearing economics, and international crypto infrastructure. Four of the five are “structurally less cyclical than the trading line the multiple is anchored to,” Scotiabank said.
The firm believes that the scaling of Robinhood’s newer business lines without a loss of expense discipline will drive a re-rating of the shares.
Meanwhile, Piper Sandler analyst Patrick Moley said that the price target hike was built on the thesis based on prediction markets rather than Robinhood’s core brokerage business.
As per Koyfin data, HOOD stock has a 12-month average price target of $123.38, implying an upside of more than 15% from its last close.
Of the 19 analysts covering the stock, 24 have a ‘Buy’ or higher rating on the shares, while three have a ‘Hold’ rating and two rate the stock ‘Sell’ or lower.
Robinhood Eyes Expanded User Base
Additionally, Robinhood’s new referral program, launched on Wednesday and allows existing users to earn up to $15,000 in stock, is aimed at growing its user base.
Existing users can recommend friends to the app and earn more for every new account opened.
“I’ve always liked the idea that becoming an owner is something you can bring other people into. You start investing, then help a friend or family member get started too. Now they have a stake in the markets and can bring someone else along someday. Our new referral program rewards you for doing more of that,” CEO Vlad Tenev said in a post on X.