IBKR - Interactive Brokers: Why There Is Explosive Upside To The Earnings' Growth Narrative
2024-04-16 17:31:51 ET
Summary
- IBKR delivered strong Q4 and FY 2023 results, beating expectations on top-line and meeting rich estimates on earnings.
- Early insights in 2024 show increasing margin balances and trade volume, supporting bullish earnings growth for IBKR.
- Increased margin balances and trading volume are poised to compound the impact of rich margin rates, likely supercharging IBKR's earnings growth.
- On the backdrop of supportive and accelerating commercial momentum for Interactive Brokers, I raise my target price to $127/ share.
Interactive Brokers' (IBKR) shares are up about 38% since I initiated coverage in October 2023, compared to a gain of about 22% for the S&P 500 (SP500) over the same period. And as IBKR stock has overshot my previously guided target price of about $98, I think it is time to revisit my thesis. Overall, fueled by a strong Q4 report and a promising monthly metric performance from through the first three months of 2024, outperforming expectations, I remain very bullish on IBKR. While I previously argued that higher interest rate benchmarks will drive net interest income for Interactive Broker, which I expect to continue, I now also argue that higher margin balances and trade volume will compound the NIM-implied earnings growth over the next 12–24 months. Amid increasing commercial momentum for Interactive Brokers, I revisit my EPS forecasts for the company up to 2026. Based on these updates, I now estimate a fair share price of $127....
Interactive Brokers: Why There Is Explosive Upside To The Earnings' Growth Narrative