Goldman Sachs: Initial eToro (ETOR.US) “buy” rating European market share is expected to continue to grow

The Zhitong Finance App learned that Goldman Sachs covered the global retail broker eToro (ETOR.US) for the first time and gave it a “buy” rating, with a target price of $76. Goldman Sachs is optimistic about the company's prospects in the European market.

Goldman Sachs believes that in the fragmented European retail brokerage market, eToro's market share is expected to continue to grow, driven by differentiated services: wide geographical and product coverage (with a pan-European customer base that can trade global unleveraged and unleveraged stocks, currencies, commodities, and cryptocurrencies); technology-driven services; and CopyTrader, a tool that combines risk control and social trading functions to meet the needs of young investors. Driven by these factors, eToro's market share has increased by about 5.5 percent since 2019.

Goldman Sachs expects eToro's account to achieve structural growth of 10% per year from 2024 to 2027, while the compound annual revenue growth rate is 9%, slightly lower than the account growth rate. The reason is that retail transactions are still strong, but activity is slightly lower than 2024, and the Federal Reserve is expected to lower the federal funds rate 5 times from 2025 to 2026, putting pressure on net interest income (NII).

Although eToro's potential for expansion in the US market remains uncertain, in terms of its competitiveness and ultimate profitability, attractive European market opportunities should fully cover this concern. Overall, Goldman Sachs expects eToro net profit to grow at a compound annual rate of 15% from 2024-2027, the same rate of 9%.