Robinhood Markets (HOOD) received an upgrade from Wolfe Research from Peer Perform to Outperform with a price target of $29 per share. The firm cited the firm’s strong fundamentals as helping it achieve expansion.
Wolfe Research managing director Steven Chubak joins sector Domination to give insight into the firm’s upgrade and how he believes the stock will perform moving forward.
Chubak outlines the expansion levers that Wall Street is missing: “I think the most important component is actually expenditures. So there is a tendency to focus on a lot of the brokerage metrics. But what’s really going to drive the earnings expansion from here is the fact that they have a highly leverageable expense base, where our expectation is that 90% of their expenditures are fixed. They are going to see 75% incremental margins…It’s that operating leverage that people are not adequately reflecting in numbers and that’s really the biggest source of upside,” Chubak tells Yahoo financial.
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