BofA Securities adjusted its outlook on Futu Holdings Limited (NASDAQ:FUTU), raising the stock's price target to $90.00 from the previous $80.20. The firm has maintained a Buy rating on the shares. The revision comes in the wake of significant quarter-to-date (QTD) increases in major Hong Kong/China ADR indices, which saw a rise of 6-18%, and major U.S. indices, which went up by 2-5%. This market performance, coupled with high volatility as indicated by the VIX, suggests numerous trading opportunities.
BofA Securities highlighted that Futu Holdings had previously issued positive guidance for the third quarter on August 21, 2024. The analyst pointed to the potential for asset reallocation into stock markets following the Federal Reserve's rate cut and the recent rally in Hong Kong/China markets as factors that could further enhance client asset inflows and trading activities for Futu.
In response to the evolving market conditions, BofA Securities has updated Futu's earnings estimates for 2024-2026 by approximately ±4%. This adjustment reflects an increase in client assets, higher trading velocity, and the impact of larger and faster Federal Reserve rate cuts as forecasted by the firm's U.S. economists.
The target price-to-earnings (P/E) multiple for Futu was increased from 16x to 18x, a decision supported by the positive policy surprise and expectations for more coordinated policy easing. The new target P/E multiple is still considered reasonable when compared to the 2024-25E P/E multiples for U.S. online brokers, which stand at 19-32x, and China online brokers at 26x.
In conclusion, BofA Securities reiterated its Buy rating on Futu Holdings, citing the company's diversified market exposure, robust client and assets under management (AUM) growth, positive developments in overseas markets, new product offerings, and improving market sentiments in Hong Kong and China.
In other recent news, Futu Holdings showcased significant growth in the second quarter of 2024, with a rise in both paying clients and net income. The firm reported a 29% year-over-year growth, reaching over 2 million paying clients, and an 8% increase in net income, totaling HKD1.2 billion. Furthermore, the company raised its full-year guidance for new paying clients to 550,000, following a substantial 168% year-over-year increase this quarter.
BofA Securities has updated its outlook on Futu Holdings, raising the price target to $80.20 from the previous $77.60 while maintaining a Buy rating. This adjustment comes after the company expressed confidence in achieving their target of 550,000 new paying clients in FY24.
The company also reported strong net client asset inflows, with approximately HKD 50 billion in the second quarter of 2024, and over HKD 80 billion in the first half of the year, a significant increase from HKD 70 billion in 2023. Futu Holdings has also launched cryptocurrency trading in Hong Kong and Singapore, with plans to expand product offerings in Japan.
InvestingPro Insights
Following the positive outlook from BofA Securities on Futu Holdings Limited (NASDAQ:FUTU), real-time data from InvestingPro aligns with the firm's optimistic assessment. Futu's market capitalization stands at an impressive $11.07 billion, reflecting the company's substantial presence in the financial sector. The P/E ratio, a key indicator of market expectations about the company's earnings growth, is currently at 20.29, which is high relative to near-term earnings growth. This suggests that investors may be anticipating higher future earnings or that the stock is trading at a premium due to other factors such as market sentiment or growth potential.
InvestingPro Tips highlight that Futu has experienced a significant return over the last week, with a price total return of 11.37%, and an even stronger return over the last month at 23.4%. This performance is indicative of the company's robust trading activities and market presence, aligning with the analyst's note regarding trading opportunities in volatile markets. Moreover, analysts predict Futu will be profitable this year, which is corroborated by the company's profitability over the last twelve months. These insights suggest that Futu's current market dynamics and financial health are well-positioned to support BofA Securities' Buy rating and raised price target.
For investors seeking more in-depth analysis, additional InvestingPro Tips on Futu Holdings Limited can be found at https://www.investing.com/pro/FUTU, providing a comprehensive perspective on the company's performance and future outlook.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.