Bank Of America, Robinhood Upgraded On Bullish Drivers For 2025

Robinhood stock was little-changed early Tuesday after receiving two upgrades to start the week. Bank of America also received a major boost from analysts ahead of its Jan. 16 earnings report.

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JPMorgan upgraded Robinhood (HOOD) to neutral from underweight during a review of brokers, asset managers and the exchanges space, The Fly reported. The firm wrote that alternative asset managers "continue to see compelling secular tailwinds," with retail and wealth as the "most compelling." Exchanges are "less compelling in positive markets," JPMorgan said, which results in slower growth than asset-sensitive financial firms such as asset managers and some brokers.

The report named brokers is JPMorgan's favorite sector to begin the year. Resilient short-term rates should support margin lending and high-margin businesses.

JPMorgan said that Robinhood has made "notable progress in legitimizing its operations," compared to its primary reliance on meme-stock trading three years ago.

The firm hiked its price target on HOOD stock by $23 to 43.

JPMorgan's upgrade followed a positive note from Goldman Sachs on Monday. The Goldman report also saw Robinhood as having successfully migrated from a fast-growing, periodically profitable online broker with a mostly young investor base, to a best-in-class top and bottom-line asset under custody (AUC) compounder with a growing addressable market. The firm expects wallet share gains among highly-profitable traders to drive near-to-medium-term growth. Robinhood also has an opportunity to expand its total addressable market into other areas, such as wealth and internationally. Goldman Sachs raised its price target on Robinhood stock nominally, to 47 from 46 , but kept a buy rating on the shares.

HOOD stock ticked down a fraction early Tuesday.

Robinhood has rallied about 205% from an early August low. Shares have popped more than 14% already in January.

Bank of America Upgraded

Elsewhere, UBS on Tuesday upgraded Bank of America (BAC) to buy from neutral and raised its price target on BAC stock to 53 from 43.

Wall Street has not yet recalibrated Bank of America's EPS power from higher-for-longer rates in the postelection landscape of deregulation, UBS said, adding the bank has largely been overlooked as a beneficiary of Basel 3 Endgame "softening." The Basel 3 international banking standards have been gradually implemented since 2012, following the 2007-08 financial meltdown. The endgame, the final portion of the framework, is scheduled for July. Some proposed increases to regulations, such as capital requirements, were "softened" in late 2024 and lowered from their initial announcements.

Bank of America is one of the banks that stand to benefit from reduced capital requirements. It also has the strongest incentive among money centers to buy back stocks now, UBS added. The firm thinks that Bank of America could repurchase $18 billion of stock in 2025.

Truist on Monday also initiated coverage of Bank of America with a buy rating and a 52 price target. Big banks are positioned to leverage cyclical recovery and capital flexibility to drive organic franchise expansion, double-digit EPS growth and attractive return on tangible common equity (ROTCE) over the 2025 and 2026 fiscal years, the firm wrote.

The gradual repricing of fixed rate assets and a revival in retail deposit growth should drive 4% to 5% net interest income growth for Bank of America by next year. Truist also expects BofA to produce above-average EPS growth and significant ROTCE expansion by 2026.

Bank of America Earnings

Meanwhile, Bank of America is set to report Q4 results on Jan. 16. FactSet expects earnings to increase 120% to 77 cents per share on on about 7% revenue growth to $25.13 billion.

The results would mark the bank's first earnings increase after four consecutive quarters of declines.

Analysts predict net interest income rises 2.3%. Card income and service charges on deposits are also expected to see modest gains.

Bank of America stock climbed 2.4% early Tuesday as it continues to rise back above its 50-day line.

BAC stock is trading in a six-week flat base with a 48.08 buy point.

Shares are up 3.3% in 2025 through Monday.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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