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On Thursday, KeyBanc Capital Markets updated its outlook on Robinhood Markets (NASDAQ:HOOD), lifting the stock’s price target to $75 from the previous $57, while sustaining an Overweight rating. The adjustment follows Robinhood’s fourth-quarter performance in 2024, which showcased robust business momentum and operational leverage, surpassing KeyBanc’s own estimates for revenue, EBITDA, and EPS, even after accounting for one-time benefits. The stock has demonstrated remarkable momentum, with a 372% return over the past year and currently trades near its 52-week high of $57.27. According to InvestingPro analysis, the company appears overvalued at its current market capitalization of $49.4 billion.
The analysis by KeyBanc highlighted several positive aspects of Robinhood’s recent performance, including trading volume and gross fees/rebates that exceeded expectations, while incentive contra-revenue presented a slight counterbalance. Robinhood’s operational expense guidance for 2025 was also more favorable than anticipated, although it did not account for potential integration costs associated with TradePMR and Bitstamp. The company maintains a strong gross profit margin of 86.5% and has achieved profitability in the last twelve months, with an EBITDA of $949 million.
January data indicated relative stability in trading activity (excluding crypto), net deposits, and other vital metrics. KeyBanc anticipates that Robinhood’s latest financial results and the commentary for fiscal year 2025, which covers product updates, operational expense guidance, and dilution, will be received positively by the market.
Following the analysis of the fourth-quarter data, KeyBanc has increased its revenue forecast for fiscal year 2025, mainly due to adjustments in net interest revenue. The firm’s revised forecast for adjusted EBITDA reflects the unexpected operational expense leverage, while the increase in the EPS estimate is moderated by a projected higher effective tax rate. KeyBanc also adjusted its projections for fiscal year 2026 upwards for similar reasons, signaling confidence in Robinhood’s continued financial growth and operational efficiency.
In other recent news, Robinhood has expanded its offerings in the UK with the launch of options trading, a move that follows increasing interest from retail investors. As part of this introduction, the platform has waived contract fees until May 17, 2025, emphasizing informed trading practices with an appropriateness test for UK customers.
In another development, Mizuho (NYSE:MFG) Securities raised its price target for Robinhood to $65.00, maintaining an Outperform rating. This decision was influenced by a survey revealing Robinhood users’ interest in mobile sports betting, a feature the company has recently explored.
However, Robinhood’s venture into sports event contracts faced a setback when the Commodity Futures Trading Commission (CFTC) requested the suspension of its Super Bowl betting feature. The company, which had already rolled out the feature to a fraction of its customers, expressed disappointment at this development.
In response to the CFTC’s request, Robinhood Derivatives, LLC (RHD) has paused the launch of its Pro Football Championship market. Despite this, RHD plans to continue its collaboration with the CFTC, aiming to launch a more comprehensive event contracts platform later this year.
These recent developments come ahead of Robinhood’s fourth-quarter earnings report, which is expected to highlight significant increases in options contracts, reflecting the company’s ongoing efforts to diversify its offerings.
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