Investing.com -- Robinhood Markets Inc (NASDAQ:HOOD) is likely to post an "impressive quarter" on Wednesday, analysts at Mizuho have predicted, citing an anticipated uptick in trading volumes.
Figures from a Securities and Exchange Commission report on payment-for-order-flow -- the compensation brokers receive for routing trades -- showed a "sequential increase in volumes for both equities and crypto[currencies], with a slight decline in options volumes," the Mizuho analysts said in a note to clients.
As a result, they raised their estimates for Robinhood's first-quarter trading revenue in all three of these areas. Total trading revenue is also now seen at $265 million from $223 million, bumping up overall projected revenues to $558 million from $520 million.
The analysts subsequently improved their price target for Robinhood's stock by one dollar to $21.
In a note to clients, they added that "further potential upside" could come from Robinhood's push to monetize its premium Gold membership base, as well as "incremental traction" from the launch of the app's U.K. arm in March.
They now value Robinhood, whose services allowed many retail investors to make commission-free wagers that fueled a pandemic-era surge in so-called "meme" stocks, at 6 times its estimates 2025 fiscal year revenues. It currently exchanges hands at around 5 times its anticipated 2025 revenues.
"We believe a premium is appropriate given the strong execution exhibited so far in '24," the Mizuho analysts said. However, they flagged that risks remain from potential losses in equities and options to rival platforms, as well as "lower ongoing interest" in investing and personal finance from retail traders.