Goldman upgrades Robinhood to Buy on ‘best-in-class’ earnings growth

Goldman Sachs upgraded Robinhood (HOOD) to Buy from Neutral with a price target of $46, up from $40, after assuming coverage of the name. The shares are up 205% year-to-date, but Robinhood’s price appreciation is relatively more sustainable versus peers, as 50% of the performance has been from positive earnings estimate revisions with the market increasingly discounts sustainable profitability going forward, the analyst tells investors in a research note. The firm says Robinhood has successfully migrated from a “fast growing, periodically profitable online broker servicing mostly younger investors, to a best-in-class top and bottom-line asset under custody compounder with a growing total addressable market.” In the near- to-medium-term, Goldman sees the company’s growth driven by continued wallet share gains among “highly-profitable” active traders, and a long-term opportunity to expand its total addressable market into new areas, such as wealth and internationally.