Wolfe Research cuts Robinhood rating on valuation concerns

Investing.com -- Wolfe Research has downgraded shares of Robinhood Markets Inc (NASDAQ: HOOD) to "Peer Perform" from "Outperform" on valuation concerns and competitive risks.

Analysts at Wolfe said the bullish drivers underpinning their June 2024 upgrade have largely played out, with EPS estimates significantly revised upward and crypto-related tailwinds now well understood by investors.

"While we continue to see a credible path to $2+ EPS by 2026, with shares trading at ~30x that figure, consistent with other growth financials, upside appears fully baked," the analysts wrote, adding that shares trade at around 30 times that estimate.

The firm also flagged potential competitive threats from traditional financial giants like Fidelity and Schwab, which could erode Robinhood’s advantage in the crypto trading space.

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