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Robinhood bull removes “buy” rating, cuts estimates

Morgan Stanley’s analysts covering brokerages also cut their price target and pivoted to more defensive, bond-focused firms like MarketAxess, Cboe, and CME.

Matt Phillips

Analysts at Morgan Stanley cut their “overweight” rating (basically, a buy) on Robinhood to “equal weight” (or hold), and downgraded their earnings forecast and price target for the stock, citing risks “that retail investors begin to disengage (for which we saw signs in March) in a period of prolonged market volatility and sharp drawdowns in broad market indices.” They wrote:

“In the context of a highly volatile and less certain macro environment with risks/uncertainty surrounding government policy, economic growth, and inflation, we lower our retail trading forecasts at the retail brokers and market infrastructure firms… and shift our preferences towards stocks that are less levered to retail trading.”

Morgan Stanley cut its price target for the shares to $40 from $90 — which was the second highest on Wall Street, according to Bloomberg data — and cut its earnings per share estimate for 2025 by 29%.

Robinhood has been hit hard since the stock market topped out on February 19, falling 40% through yesterday’s close, though the shares are bouncing higher today.

For what it’s worth, the bank also cut its ratings on Nasdaq, Virtu Financial, and Tradeweb to “equal weight” from “overweight,” and upgraded its rating on bond- and hedging-focused financial companies like CME Group, Cboe, and Marketaxess, shares that have done relatively well during the recent market tumult.

(Sherwood Media is an editorially independent subsidiary of Robinhood Markets Inc. I own Robinhood stock as part of my compensation.)

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