Robinhood: Evercore ISI sees product flywheel driving upside

Investing.com -- Evercore ISI started coverage of Robinhood Markets with an Outperform rating and a 12-month price target of $130 in a note on Monday.

The firm called Robinhood “a very impressive company that achieved a significant user and deposit base in a relatively short period of time.”

Evercore’s positive thesis rests on two factors, with Robinhood having built and monetized a deep product ecosystem with strong user experience, aiming to be a one-stop shop for financial services that can also support a more affluent customer base.

It also believes the company can keep growing deposits at more than 20%, with both still underpenetrated.

The firm said Robinhood’s lower reliance on cash spreads provides some protection against structural headwinds, while its pricing is among the best in the industry across a diverse range of products.

Evercore pointed to Robinhood’s track record of driving adoption of new products and taking them to $100 million in revenue fairly quickly, with 13 such offerings now. Combined with early-stage prediction markets and its Chain business, the firm believes the stock can keep carrying a premium valuation.

At current levels, Evercore said shares discount either steady near-term deposit and monetization trends, or significant growth in areas such as prediction markets, international, institutional and Chain, but not both.

The firm said it debated waiting for a better entry point. However, it expects continued growth and cost discipline to drive the next major move over the next 12 months or more.

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