Robinhood Markets (NASDAQ:HOOD) shares rose 2.4% in pre-market trading after Morgan Stanley upgraded the fintech brokerage to “Overweight” from “Equalweight” and increased its price target to $150 from $124.
Morgan Stanley analysts cited evidence that Robinhood’s expanding range of financial products is increasing the value generated from its existing customer base, including higher assets and transaction activity per customer and increased revenue captured per transaction.
Morgan Stanley highlights existing customer base
A central part of Morgan Stanley’s assessment is Robinhood’s ability to generate additional revenue from the approximately 28 million customers already using its platform.
The firm said the company now has multiple ways to increase revenue from existing users, reducing its reliance on new customer additions or periods of elevated retail trading activity.
Morgan Stanley also identified this opportunity as a factor that could extend Robinhood’s growth trajectory. The brokerage’s revised $150 price target represents an analyst estimate and does not indicate future share-price performance.
The upgrade comes as Robinhood already has a broader consensus “Buy” rating among Wall Street analysts, according to the supplied information.
Robinhood advances as broader U.S. market declines
Robinhood’s pre-market increase came as the major U.S. equity indices traded lower. The S&P 500 declined 0.6%, the Dow Jones fell 0.7% and the Nasdaq was down 1.1%.
The shares have traded within a 52-week range of $63.52 to $153.86.
Tuesday’s 2.4% pre-market increase followed Morgan Stanley’s rating change and higher price target, with the brokerage focusing on Robinhood’s potential to generate additional revenue from its existing customer base.
