The crypto market rally is continuing, and analysts at financial research firm Bernstein believe Robinhood (NASDAQ:HOOD) is a stock to consider to play "a monster of a crypto cycle over 2024-25."
Robinhood's stock jumped Thursday after reporting its February operating date, which saw funded customers at the end of the month rise approximately 130 thousand from January 2024.
Meanwhile, assets under custody (AUC) at the end of February were $118.7 billion, up 16% from January 2024. Net deposits were $3.6 billion in February, translating to a 42% annualized growth rate relative to January 2024 AUC.
Trading volumes were also higher across all asset classes compared to January. Equity notional trading volumes were $80.9 billion, up 36%, while options contracts traded were 119.1 million, up 12%, and crypto notional trading volumes were $6.5 billion, up 10%.
At the time of writing, Robinhood stock is up 7.3% at $18.42 per share. The stock initially hit a high of $19.23 per share at the open. So far this year, it has gained 43.6%, while in the last 12 months, it has increased 107.6%.
Analysts at Bernstein initiated an Outperform rating and $30 price target on HOOD shares, saying the company is riding the crypto comeback arc.
They claim the buy-side and sell-side alike refuse to see the monster of a crypto cycle over 2024-25, and they expect the crypto market cap to reach $7.5 trillion compared to $2.6 trillion today, led by Bitcoin at $3 trillion by 2025.
"This leads to HOOD growing its crypto revenues by 9-fold (5x vs consensus), leading to us being 54% ahead on HOOD's 2025 consensus revenues and 3.5 times 2025 consensus earnings," said analysts at Bernstein.
They emphasized HOOD's full-suite crypto offering within a regulated broker platform as being "in a sweet spot," given its captive base of 11 million active traders, with "strong fit to trade crypto."
"HOOD's rates are competitive vs. crypto exchanges such as Coinbase (35 bps vs 150 bps)," added the firm. "Traditional broker platforms (e.g Schwab) remain shy to offer crypto, besides having an older, more savings focused customer base."
Furthermore, they view HOOD as a two-year cyclical trade, saying investors can ride the crypto-led earnings inflection over 2024 and 2025.
"We value HOOD at a target multiple of ~7.8x 2025 revenues and ~29.4x 2025 earnings, in line with the average crypto/broking/fintech multiples (PT $30, 83% upside)," concluded analysts at Bernstein.