Investing.com -- Rosenblatt initiated coverage of Robinhood Markets with a Buy rating and a $135 price target in a note on Wednesday, describing the company as one of the best growth stories in the financial sector.

The “generational growth story deserves [a] premium valuation,” analyst Chris Brendler said.

Brendler notes that Robinhood brought a new generation into the markets by making investing free, simple and mobile, forcing incumbents to follow.

“In our view, few companies can claim to have changed an entire industry, but Robinhood can,” the analyst wrote.

Rosenblatt believes investors still underestimate how far the business has evolved.

“What started as a commission-free trading app has become a full financial platform, and we think the market still under-appreciates how much the story has matured,” the analyst said.

The firm added that Robinhood’s core brokerage continues to take share despite its massive scale. Furthermore, it believes that Pattern Day Trading reform removes a key constraint on the company’s most valuable customers.

Brendler said growth is increasingly driven by product expansion and deeper customer relationships, and he sees a long runway ahead, especially as international expansion accelerates.

With a largely fixed cost base and shareholder-friendly capital allocation, Rosenblatt feels Robinhood deserves to trade at a premium to its slower-growing peers.

“As such, although we admit the stock is not cheap even after the recent ~20% pullback, we are initiating coverage at BUY on what we view as one of the best growth stories in the financial sector,” Brendler said.

Original Article