Interactive Brokers Faces High Valuation Risks Amid Strong Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4d ago
0mins
Source: NASDAQ.COM
- Significant Growth: Interactive Brokers has seen a 54.05% stock price increase over the past three years, indicating strong market performance, and despite facing high valuation risks, its ongoing growth continues to attract investor interest.
- Surging Trading Volume: The company and its affiliates execute over 3.6 million trades daily, with 84% of customers located outside the U.S., highlighting its potential for international expansion and growth opportunities in the U.S. market.
- Low-Cost Operating Model: Operating primarily through electronic trading, Interactive Brokers avoids the high costs associated with traditional brick-and-mortar brokers, allowing it to attract customers with low prices while maintaining fat profit margins.
- Significant Valuation Risks: Currently, Interactive Brokers has a forward P/E ratio of 30, well above the five-year average of 20, suggesting that market expectations for its future growth may be overly optimistic, prompting investors to carefully assess the associated risks.
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Analyst Views on IBKR
Wall Street analysts forecast IBKR stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for IBKR is 81.43 USD with a low forecast of 75.00 USD and a high forecast of 91.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
7 Analyst Rating
6 Buy
1 Hold
0 Sell
Strong Buy
Current: 75.450
Low
75.00
Averages
81.43
High
91.00
Current: 75.450
Low
75.00
Averages
81.43
High
91.00
About IBKR
Interactive Brokers Group, Inc. is an automated global electronic broker. The Company custodies and services accounts for hedge and mutual funds, exchange-traded funds (ETFs), registered investment advisors, proprietary trading groups, introducing brokers and individual investors. It specializes in routing orders and executing and processing trades in stocks, options, futures, foreign exchange instruments (forex), bonds, mutual funds, ETFs, precious metals, and forecast contracts on more than 160 electronic exchanges and market centers in 36 countries and 28 currencies around the world. In addition, its customers can use its trading platform to trade certain cryptocurrencies through third-party cryptocurrency service providers that execute, clear and custody the cryptocurrencies. Its trading platforms include IBKR Desktop, IBKR Trader Workstation, IBKR Mobile, IBKR Client Portal and others. Its key product offerings include IBKR Pro, IBKR Lite, and IBKR Universal Account.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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