eToro Group Ltd (NASDAQ:ETOR) has been given a ‘Neutral’ rating and a 12-month price target of $70, reflecting modest upside, in initial coverage from analysts at UBS.
The bank’s analysts view eToro as a key beneficiary of the surge in global retail investor activity, particularly outside the US.
The platform's ability to tap into new markets and sustain engagement with its social-trading model provides room for expansion, they believe.
“As a global trading platform for retail investors, we view eToro as well positioned to benefit from increasing retail participation in financial markets, which has been accelerating in the last few years, and should support high single-digit net contribution (revenue) growth,” the analysts wrote.
“eToro has executed well against favorable macro trends in retail trading, growing funded accounts from less than 2.5 million at the end of 2021 to almost 3.5 million at the end of 2024, a compound annual growth rate (CAGR) of 13% over the past three years.”
Looking ahead, UBS expects the platform’s funded accounts to grow 9.5% in 2025 and 10% in 2026, driven by international expansion and strong brand recognition.
“The company has established a global brand and the return on marketing spend has been significant,” they wrote, noting that less than $100 million spent on marketing in 2019 generated a return on investment of 4.5x in the past seven years.
The analysts noted that because trading activity makes up the majority of eToro’s revenue, it is exposed to market fluctuations.
“Trading represented 68% of the top line in 2024, which makes eToro heavily dependent on market conditions,” UBS noted. “Crypto drove almost 60% of 2024 net revenue growth of 40%+ year-over-year as retail investor interest and trading activity in crypto assets increased on sustained price appreciation.”
Valuation a discount to US peers
The analysts’ price target of $70 is based on 27x estimated 2026 earnings per share (EPS) of $2.60. While this reflects a premium to European peers, it’s still a discount to leading US brokerage platforms.
“Our target multiple comes at a decent discount to primary US peers but at a premium to European players,” the analyst explained. “We believe the company needs to demonstrate strong execution and greater scale to move closer to a US peer valuation.”
They believe as a newly public company, eToro still has to demonstrate that it can execute on product and market expansion, while near-term results could be volatile.
“We estimate that the stock is pricing in approximately 8% revenue growth over the next two years, which creates a 1:1 upside/downside skew for the stock in our opinion,” UBS wrote. “Faster growth could close the gap to primary US peers that trade at a significant premium.”
Shares of eToro traded up 8.4% at about $75 on Monday afternoon.