On Monday, Jefferies increased the price target for Interactive Brokers Group (NASDAQ:IBKR) shares to $150 from the previous target of $138, while maintaining a "Buy" rating on the stock. The firm's decision follows a review of the company's second-quarter performance, which indicates an improvement in both trading volume and margin balances.
The revision in the stock price target is accompanied by a slight increase in the second-quarter earnings per share (EPS) estimate, from $1.66 to $1.68. This adjustment is attributed to better-than-expected trading volume and a rise in margin balances.
Interactive Brokers experienced a quarter-over-quarter increase in average daily trading volume, moving from 2,092K in the first quarter of 2024 to 2,115K. Moreover, the revenue per contract (RPC (NYSE:RES)) saw an uptick, reaching $3.00 compared to $2.93 in the previous quarter.
The average margin balance during the quarter was reported at $52.5 million, marking a 12% rise from the previous quarter. The closing balance for the margin was even higher at $55.1 billion. The growth in margin balances has also led Jefferies to raise the full-year 2024 EPS estimate from $6.55 to $6.70.
Jefferies anticipates that Interactive Brokers will maintain an adjusted operating margin of 72% for the quarter, which remains unchanged sequentially. Furthermore, the brokerage firm noted that Interactive Brokers incurred a one-time expense of $43 million due to an NYSE pricing error, which is expected to be excluded from the company's adjusted income figures. This expense was part of Interactive Brokers' efforts to compensate customers affected by the glitch.
In other recent news, Interactive Brokers has seen a surge in trading activity with a 26% increase in Daily Average Revenue Trades (DARTs) and a significant 28% year-over-year growth in accounts.
Barclays (LON:BARC) has maintained an Overweight rating on the company, anticipating stronger than expected commission revenues due to higher margin and cash balances. Still, the company faced a $48 million loss due to a technical glitch involving Berkshire Hathaway (NYSE:BRKa) Class A shares at the New York Stock Exchange.
On the positive side, Interactive Brokers has expanded its services, introducing extended trading hours for Korean KOSPI 200 derivatives and European stock options and equity index futures through Cboe Europe Derivatives.
The company has also launched Bitcoin and Ether Exchange Traded Products for trading on the Hong Kong Stock Exchange. These recent developments represent the company's commitment to providing global investment opportunities and enhancing its offerings.
InvestingPro Insights
Following Jefferies' optimistic outlook on Interactive Brokers Group (NASDAQ:IBKR), the InvestingPro platform offers additional insights that could be relevant for investors considering the stock. Interactive Brokers is currently trading at a P/E ratio of 20.89, which is quite balanced when considering the company's near-term earnings growth potential. This aligns with one of the InvestingPro Tips, highlighting the stock's low P/E ratio relative to expected earnings growth.
InvestingPro data also reveals that Interactive Brokers has a robust revenue growth of 28.41% for the last twelve months as of Q1 2024, with a gross profit margin of an impressive 90.5%. The company's commitment to shareholder returns is evident, as it has maintained dividend payments for 15 consecutive years, with a notable dividend growth of 150% in the same period. Moreover, the stock has experienced a significant price uptick, with a 6-month price total return of 41.86%.
For investors seeking a deeper dive into Interactive Brokers' financial health and future prospects, InvestingPro offers additional tips. With the use of the exclusive coupon code PRONEWS24, you can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking a wealth of expert analysis and metrics. Currently, there are 7 additional InvestingPro Tips available for Interactive Brokers, which could provide valuable context and guidance for your investment decisions.
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