Robinhood Markets Inc.
Wolfe Research Downgrades Robinhood and Wells Fargo Cuts Its Target Ahead of Earnings
Wolfe Research downgraded Robinhood to Peer Perform from Outperform Wednesday. Wolfe had upgraded the stock to Outperform in February with a $125 price target. Wells Fargo kept an Equal Weight rating but lowered its price target to $120 from $125, which implies about 8.6% upside from Tuesday's close of $110.52 and sits below the $134.56 average of 31 analysts tracked by Koyfin. Investing.com described the two actions as a "double dose of analyst caution" for a high-multiple stock ahead of earnings.
Other recent analyst activity has been more bullish. Evercore ISI initiated coverage on October 12 with a Buy rating and a $130 target. Morgan Stanley raised its target to $160 from $150 on October 9 with an Overweight rating, and Barclays raised its target on October 7 to $132 from $105 with a Buy rating. Koyfin shows 25 analysts rating the stock Buy or Strong Buy, four Hold and two Sell. Robinhood is due to report its third-quarter results on October 27, with analysts expecting revenue of about $1.4 billion and earnings per share of 64 cents.
Hot Core Inflation Strengthens the Case for More Fed Tightening
Core consumer prices rose 0.3% in September and 2.6% from a year earlier, above the 2.5% economists expected. Headline inflation hit 3.7%. Odds of a Fed rate hike this month jumped to 44% from 22% the day before, according to CME FedWatch data cited by Axios. Further tightening could slow lending and limit interest margins, which is a concern for financial companies broadly.
Bank of America and Morgan Stanley Results Dent Sector Confidence
Bank of America missed estimates, with adjusted earnings per share of $1.08 against $1.11 expected and revenue of $29.958 billion against $30.685 billion. Trading revenue came in below expectations, with fixed income down 17% and investment banking down 11%. Morgan Stanley beat estimates, with earnings per share of $3.03 on revenue of $20.34 billion, but its shares fell about 3%. Equities trading supplied roughly 80% of the revenue growth. Wells Fargo analyst Mike Mayo called the results "good, but not great," saying some business metrics improved more slowly.
Robinhood to Report Q3 Results on October 27
Robinhood is scheduled to report its third-quarter results on October 27. Analysts expect revenue of about $1.4 billion and earnings per share of 64 cents, following a second quarter in which revenue rose 32% from a year earlier. Investors will watch trading volumes, which BTIG said in a late-September note were running well ahead of consensus for the quarter across options, crypto and event contracts. They will also watch net deposits, which BTIG called underwhelming in July and August
Robinhood Shares Edge Lower
HOOD Price Action: At the time of publication, Robinhood shares are trading 2.09% lower at $98.97, according to data from Benzinga Pro.
