Goldman Sachs Initiates Coverage of eToro with Buy Rating, Targets 76% Upside

Goldman Sachs has initiated coverage of eToro (ETOR.US) with a "buy" rating and a target price of $76 per share. The investment bank is optimistic about the company's prospects in the European market, citing its differentiated services in the fragmented market.
eToro's market share in Europe has increased by approximately 5.5 percentage points since 2019. This growth is attributed to the company's unique offerings, which have resonated well with European investors. eToro's broad geographical and product coverage, tech-driven services, and the CopyTrader tool, which combines risk control and social trading, have been particularly appealing to younger investors.
Goldman Sachs anticipates that eToro's accounts will grow by 10% annually from 2024 to 2027, while revenue is expected to grow at a compound annual rate of 9%. This slight difference is due to the continued strength in retail trading, although activity is expected to be lower than in 2024. Additionally, the Federal Reserve is projected to lower the federal funds rate five times between 2025 and 2026, which could put pressure on net interest income (NII).
Despite uncertainties surrounding eToro's expansion in the U.S. market, the attractive opportunities in the European market are expected to offset these concerns. Overall, Goldman Sachs forecasts that eToro's net profit will grow at a compound annual rate of 15% from 2024 to 2027, compared to 9% for its peers.

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