Piper Sandler bullish on BGC and HOOD stocks for 4Q24 earnings

On Tuesday, Piper Sandler expressed a positive outlook for BGC Partners (NASDAQ:BGC), Inc. (NASDAQ:BGCP) and Robinhood Markets , Inc. (NASDAQ:HOOD), citing them as the most favored companies ahead of their fourth-quarter 2024 earnings.

Analysts at the firm attributed the strong performance of Exchange & Trading companies to a robust trading environment, propelled by the US Presidential Election, which led to record derivative volumes and the strongest quarter for cash equities since early 2021.

BGC Partners experienced a notable decline in share price, dropping approximately 20% from its post-election peak of $11.79 on November 11, 2024. The anticipated departure of Chairman & CEO Howard Lutnick in the first quarter of 2025 to become Commerce Secretary, along with concerns over the future success of the company's exchange without Lutnick's involvement, are believed to have contributed to the decline.

However, Piper Sandler remains optimistic, predicting an uptick in activity on FMX following the launch of UST futures and a lessening of concerns over Lutnick's exit.

Robinhood, despite its impressive 2024 stock performance, is seen as still having significant growth potential. The resurgence of retail investor enthusiasm and positive momentum are expected to carry into the first quarter of 2025. The brokerage's strong brand and relatively small market share in emerging areas such as cryptocurrency, advisory services, and various trading options are anticipated to support sustained double-digit earnings growth.

In their coverage universe, Piper Sandler noted that nine out of fourteen stocks outperformed the S&P 500 in the fourth quarter of 2024, with Robinhood, Coinbase Global , Inc. (NASDAQ:COIN), and MarketAxess Holdings Inc. (NASDAQ:MKTX) leading the pack with gains of 59%, 39%, and 32%, respectively. E-brokerages and trading companies significantly outpaced the S&P 500, while exchanges slightly underperformed.

Looking ahead to 2025, Piper Sandler foresees a more relaxed regulatory landscape, lower interest rates, and continued enthusiasm from retail traders as key factors influencing the sector. This optimistic forecast sets a positive tone for companies like BGC and Robinhood as they approach their upcoming earnings announcements.

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In other recent news, BGC Group has reported strong financial performance for Q3 of 2024, with record revenues of $561 million, marking a 16% increase from the previous year, and pre-tax adjusted earnings rising over 24% to $126.7 million.

The company's growth is attributed to strategic acquisitions and the successful launch of the FMX Futures Exchange. BGC has completed the acquisitions of OTC Global Holdings and Sage Energy Partners, projected to add over $450 million in annual revenues.

BGC Group has also expanded its financial flexibility by amending its existing credit agreement, increasing its revolving credit commitments to a total of $700 million. This move is expected to provide the company with increased liquidity to support its ongoing and future initiatives.

Mike Whitaker has been appointed as Global Chief Information Officer (CIO) at BGC Group. Whitaker, with over four decades of experience in financial services and technology, is expected to foster innovation and drive company growth.

For Q4, BGC anticipates revenues to fall between $545 million and $595 million, with pre-tax adjusted earnings estimated at $122 million to $138 million.

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