On Friday, Jefferies updated its outlook on Interactive Brokers Group (NASDAQ:IBKR), increasing the price target to $165 from $152 while maintaining a Buy rating on the stock. The firm's decision follows Interactive Brokers' impressive third-quarter performance, which included a rise in trading volumes and higher margin and cash balances.
The brokerage firm saw a quarter-over-quarter increase in average daily trading volume, reaching 2,377K compared to 2,104K in the previous quarter. Despite a slight decrease in revenue per contract (RPC (NYSE:RES)) to $2.82 from $3.01, the overall trading activity was stronger than anticipated.
Interactive Brokers also reported a 6% quarter-over-quarter growth in average margin balances, which amounted to approximately $55.5 million. Cash balances are estimated to have risen by around 2% in the same period. Year-over-year account growth was notable, with a 28% increase, marking the sixth consecutive quarterly improvement since a 19% increase in the second quarter of 2023.
In light of these results, Jefferies has adjusted its earnings per share (EPS) estimate for the third quarter of 2024 from $1.70 to $1.76. However, the firm has revised its full-year earnings estimates for 2025 and 2026 downward, from $6.90 to $6.60 for FY25, and from $6.96 to $6.77 for FY26. This revision is attributed to a faster pace of interest rate declines than previously projected.
In other recent news, Interactive Brokers Group has launched Forecast Contracts, a tool that allows investors to trade based on political event predictions. This new offering is part of the firm's innovative financial products portfolio, aiming to help investors manage risk associated with election-related market movements. Furthermore, the company's recent financial performance shows growth, with Q2 2024 earnings report revealing record net revenues and pretax income, with commissions reaching $406 million and net interest income setting a new quarterly high at $792 million.
BofA Securities adjusted its outlook on Interactive Brokers, reducing the price target to $178 while maintaining a Buy rating. Similarly, Citi reaffirmed its Buy rating on the company, emphasizing its ability to navigate various market conditions while maintaining profitability and growth.
Interactive Brokers also reported significant growth in its September metrics, with client equity and trading activity showing notable year-over-year increases. The number of client accounts grew to 3.12 million, a 28% jump from last year.
These are recent developments for Interactive Brokers, highlighting the company's strategic financial management practices, strong financial performance, and positive analyst ratings.
InvestingPro Insights
Recent data from InvestingPro adds further context to Interactive Brokers Group's strong performance. The company's market capitalization stands at $61.21 billion, reflecting its significant presence in the brokerage industry. IBKR's revenue growth of 22.02% over the last twelve months as of Q2 2024 aligns with the impressive account growth mentioned in the article.
InvestingPro Tips highlight IBKR's financial strength and market performance. The company has maintained dividend payments for 15 consecutive years, demonstrating a commitment to shareholder returns. Additionally, IBKR is trading near its 52-week high, with a strong return of 68.47% over the past year, corroborating Jefferies' positive outlook.
These insights are just a sample of the valuable information available on InvestingPro. Investors can access 12 additional tips for IBKR on the platform, providing a more comprehensive analysis of the company's prospects.
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