BofA sees Robinhood stock as prime S&P 500 addition candidate

On Wednesday, Bank of America (BofA) analysts highlighted Robinhood Markets Inc. (NASDAQ:HOOD) as a leading contender for addition to the S&P 500 index during the upcoming rebalancing. The announcement from S&P is expected on Friday at 5:15 p.m. and could include various changes such as additions, removals, migrations, and share adjustments.

BofA’s quarterly update meeting, led by Emma Huang, focused on potential changes to major indices, particularly within the Diversified Financials sector. Investors concentrated on several companies, including Ares Management Corporation (NYSE:ARES), Brookfield Asset Management (NYSE:BAM), Robinhood, Interactive Brokers Group, Inc. (NASDAQ:IBKR), Invesco Ltd . (NYSE:IVZ), LPL Financial Holdings Inc. (NASDAQ:LPLA), and Tradeweb Markets Inc . (NASDAQ:TW).

Robinhood and Ares are seen as top candidates for inclusion in the S&P 500, according to BofA analysts. They also identified Interactive Brokers as a strong candidate for migration from the S&P 400 due to its size and the current weighting of financials in both indices.

In addition to Robinhood and Ares, other companies such as Cheniere Energy, Inc. (NYSE:LNG), Flutter Entertainment plc (OTC:PDYPY), Veeva Systems Inc. (NYSE:VEEV), Carvana Co. (NYSE:CVNA), and Applovin Corporation (NASDAQ:APP) were mentioned as potential candidates for addition to the S&P 500.

The analysts noted that if Robinhood or Ares were to be added, significant buying activity from passive funds is expected, with projections of 17% gross and 12% net of their floats. For companies like Carvana, which has seen its stock surge over 236% in the past year and trades near its 52-week high, such inclusion could drive further momentum. InvestingPro analysis reveals 23 additional key insights about Carvana’s valuation and growth prospects, available exclusively to subscribers through comprehensive Pro Research Reports.

In other recent news, Carvana has seen significant attention from analysts following its impressive quarterly performance. RBC Capital Markets increased their price target for Carvana to $340, citing robust first-quarter results, particularly in retail units sold, and the company’s ability to leverage gross profit per unit and fixed costs. Similarly, Needham maintained a $340 target, highlighting Carvana as a top-tier growth prospect with significant market potential due to its business model and vehicle reconditioning capacity. Piper Sandler also raised its price target to $315, noting Carvana’s strong quarterly performance and high-visibility growth. Morgan Stanley (NYSE:MS) adjusted their price target to $290, reflecting confidence in Carvana’s growth trajectory and market position.

DA Davidson, on the other hand, maintained a Neutral rating with a $260 price target, acknowledging Carvana’s impressive performance but expressing a more cautious outlook. Analysts have noted Carvana’s ability to outperform competitors and its potential for sustained growth and profitability. The company’s recent results have reinforced its position in the market, with analysts expressing optimism about its future prospects. Overall, Carvana’s recent developments have captured the attention of investors and analysts, with several firms revising their price targets upwards.

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