Interactive Brokers gets neutral rating as account growth faces valuation test

Investing.com -- Interactive Brokers' rapid expansion in customer accounts is driving strong revenue growth, but the pace may prove difficult to sustain as its customer base gets larger, Raymond James said as it initiated coverage of the online brokerage with a Market Perform rating.

The brokerage said Interactive Brokers has delivered net revenue growth of at least 15% annually since 2021, supported by strong account additions despite relatively limited marketing expenditure. It expects the law of large numbers to eventually slow account growth and put pressure on the company's elevated earnings multiple.

Customer accounts grew 34% year over year in the second quarter of 2026, the fastest pace since the first half of 2022, taking the total to 5.2 million from 2.9 million two years earlier. The company added 431,000 net accounts during the quarter, while spending about $110 million on marketing over the previous four quarters.

Raymond James expects account growth eventually to moderate toward historical levels, either through slower additions or a shift toward accounts that generate less revenue. It said growth below 30% a year from now appears more likely than another acceleration from current levels.

The brokerage also highlighted signs of elevated retail-market participation. Average cleared trades per account increased 3.5% in 2025 after rising 5.9% in 2024, while margin-loan utilization climbed to 11.7% of client equity at the end of the second quarter from 10.4% at the end of 2023. Raymond James sees downside risk to investor risk appetite, particularly if markets enter a sustained downturn.

Profitability remains a major strength. Interactive Brokers posted a 76.7% adjusted pre-tax margin in 2025, with the brokerage expecting further expansion as revenue growth allows the highly scalable business model to absorb investment spending.

Raymond James estimates adjusted earnings per share of $2.66 in 2026, $3.15 in 2027 and $3.70 in 2028. The shares trade at about 30 times next-12-month earnings, above three- and five-year averages of 24 times and 21 times, respectively, making continued account and revenue growth important to supporting the current valuation.

You May Also Be Interested In

• Raymond James Starts Interactive Brokers Group (IBKR) at Market Perform
• Citi cuts Abercrombie rating after stock surge, lifts price target
• Premarket movers: Nvidia, Salesforce and CrowdStrike rally on earnings