KBW starts coverage of Robinhood at 'market perform'

Investing.com - KBW started coverage of Robinhood (NASDAQ:HOOD) with a ‘market perform’ rating, noting the sharp gains that the financial technology firm has recorded this year.

At 11:00 ET (15:00 GMT), Robinhood stock rose 1.1% to $19.41, up just under 17% over the last month, more than 50% higher so far this year.

The company has benefited strongly from its decision to launch a credit card, expanding its product offerings in order to reduce its reliance on market-sensitive trading revenue.

Retail-investor focused Robinhood is set to offer its premium 'Gold' tier customers a credit card which would have no annual fee, no foreign transaction fees and offers 3% cashback, in the form of reward points, on spends.

“We greatly appreciate and respect what this management team has done over the past 18 months in rightsizing the company’s cost base, returning to GAAP profitability, all while accelerating product development/launches,” analysts at Keefe, Bruyette&Woods, in a note dated April 2.

That said, KBW initiated coverage with a ‘market perform’ rating, with a 12-month price target of $20, adding that this positive view has to be balanced with a stock price that has adequately captured the baseline upside from new product launches.

Additionally, the share price gains are “also beginning to price in a higher level of normalized retail trading activity than we are willing to underwrite at this moment in time.”