By Mackenzie Tatananni
Shares of Robinhood Markets rose after a Morgan Stanley analyst more than doubled his target for the stock's price, citing a revival of "animal spirits" and favorable conditions for cryptocurrencies under the second Trump administration.
The stock was up 4% to $38 Monday, putting it on pace for its best month on record, according to Dow Jones Market Data. Analyst Michael Cyprys upgraded the shares to Overweight from Equal Weight and raised his price target to $55 from $24.
Robinhood, a discount brokerage, is one of the "biggest beneficiaries of the election results" among the companies Morgan Stanley covers, Cyprys said. He praised Robinhood's decision to acquire TradePMR, a custodial and portfolio management platform, saying the deal, announced last week, will expand the market Robinhood could potentially serve.
The acquisition is "one of multiple initiatives that provide significant optionality longer term," Cyprys wrote. Morgan Stanley projects that Robinhood's revenue will grow at a compound annual growth rate of 15% through 2027.
An investor day the company has scheduled for Dec. 4 should boost confidence in its growth and encourage buying of the stock, Cyprys added.
While the shares are up more than 100% this year, the firm believes the stock has "more room to run," arguing that Robinhood trades at a discounted valuation, is rolling out new initiatives more rapidly, and stands to benefit from postelection enthusiasm among investors.
"Looking out to 2025, a pickup in IPOs and M&A activity could further boost retail engagement and trading activity, while more favorable regulatory environment around digital assets could see HOOD lean in more aggressively to the opportunity," Cyprys wrote.
Morgan Stanley isn't the only firm to upgrade the stock. Last week, Needham analyst John Todaro raised his call on Robinhood to Buy from Hold and set a price target of $40, up from $33.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 25, 2024 12:20 ET (17:20 GMT)
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