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3 Robinhood Favs the Street Loves Too

Given the largely speculative nature of the Robinhood-100 list, it's not often that fundamentally focused research firms agree with the largely social media-driven retail trader. Yet the Street and Robinhooders...

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This story originally appeared on MarketBeat

Popular trading app Robinhood hasn’t fared so well as a public company. Nearly a year ago, the stock debuted on the Nasdaq at $38.00 per share. On Friday, it closed at $8.00.

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That hasn’t stopped users from scrolling through their phones to grab shares of their favorite companies during the 2022 bear market. In fact, the list of the most popular names held in Robinhood accounts hasn’t changed much.

Today’s Robinhood-100 still contains a mixed bag of steady mega caps like Apple, has-beens such as Peloton, and “could-be’s” like Context Logic and Sundial Growers. It is a lineup that looks strikingly similar to 12 months ago.

We know Robinhooders have stayed loyal to their favorite holdings during the market downturn. But what about Wall Street? 

Given the largely speculative nature of the Robinhood-100 list, it’s not often that fundamentally focused research firms agree with the largely social media-driven retail trader. Yet the Street and Robinhooders are clearly on board with the growth potential of these three names.

What is the Most Popular Stock on Robinhood? 

Microsoft Corporation (NASDAQ: MSFT) sits atop the Robinhood-100, the most owned stock among a growing army of youthful investors. The world’s second-largest company by market cap is also a heavy Street favorite.

In the past three months, more than two dozen sell-side firms have called Microsoft a buy. Only one has maintained a neutral stance and none have been brazen enough to go bearish. 

Why would they? With technology woefully out of favor as of late, shares of the software maker are down more than 20% from their November 2021 peak.

On top of the overwhelmingly bullish Street sentiment, recent Microsoft price targets run well into the $300’s. Earlier this month, two firms, Wells Fargo and Credit Suisse, slapped $400 targets on the stock implying 50% upside and a new all-time high.

Analysts have consistently called the Microsoft pullback a buy opportunity. That’s mainly because the long-term growth prospects in the Azure cloud business remain strong. With the digital transformation well underway across many industries, demand for cloud infrastructure and apps is expected to drive double-digit earnings growth over the next several years. An aggressive push into the gaming market through the Activision Blizzard buyout should also keep the growth (and Robinhood traders) coming.

Will NIO Stock Keep Going Up?

NIO Inc. (NYSE: NIO) is an early frontrunner for this summer’s greatest smash hit. The Chinese electric vehicle (EV) manufacturer has more than doubled off last month’s bottom and has some serious momentum on its side. It also has Wall Street on its side, not to mention being a top 20 most popular Robinhood stock. 

A perfect 12 for 12 analysts have given NIO a buy rating in the last 3 months with not a hold or sell to be had. In the past few weeks alone, eight of those analysts have reiterated their bullish opinions. Last week, Mizuho Securities became the latest group to offer a bright view on NIO—and a $48 price target that suggests the stock can double again.

It’s easy to see why retail traders and the Street are optimistic about NIO’s growth potential. After all, the company has a leading position in the world’s largest EV market. Last year China accounted for more than half of global EV sales.

This year NIO has been slowed by renewed Covid lockdowns and supply chain disruptions but there have been signs of improvement. May 2022 vehicle deliveries were up 12% in spite of the recent outbreaks. And with restrictions easing and demand strong, management said it plans to accelerate the delivery of its premium smart electric sedans and SUVs in the back half of the year. 

Earlier this month, Deutsche Bank noted that NIO is on the cusp of a “robust product supercycle” whereby deliveries could triple by year end. Based on the momentum in the stock, a triple off the bottom could happen well before. 

What is Robinhood’s Favorite Drug Stock?

Catalyst Pharmaceuticals, Inc. (NASDAQ: CPRX) is the most widely held healthcare stock amongst Robinhooders. The biotech is even more popular than coronavirus vaccine mainstays Pfizer and Moderna. Why?

For starters, Catalyst is a bit of an underdog story having emerged from the depths of penny stock territory to a record high near $9 in April 2022 while the broader market struggled. And given its low share price, there would seem to be more upside compared to the more established, higher-priced Pfizer and Moderna.

Beyond that, the company is seeing tremendous adoption of its lead product Firdapse, a treatment for a rare disease called Lambert-Eaton Myasthenic Syndrome (LEMS). The drug, which is also being developed for other neuromuscular conditions, got a big boost from a March 2022 FDA ruling against a rival drug that paved the way for the run to an all-time high.

Aside from Firdapse, Catalyst’s development of a generic version of infantile spasm therapy Sabril in partnership with Endo Pharmaceuticals could lead to a reduced dependence on their lead program and higher sales. This along with a pipeline focused on treatments for other rare diseases has the Street’s most recently issued price targets at $12, which implies 77% upside.

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