On Monday, BofA Securities updated its outlook on Lufax Holding Ltd (NYSE: NYSE:LU), increasing the price target to $3.18 from the previous $2.75 while maintaining a Neutral rating on the stock. The adjustment follows Lufax's reported widening losses before tax, which grew from RMB 364 million in the second quarter of 2024 to RMB 718 million in the third quarter of the same year. Concurrently, the net loss attributable to shareholders also expanded from RMB 792 million to RMB 875 million over the same period.
In light of these results, BofA Securities has revised its earnings per share (EPS) forecasts for the years 2024 to 2026 downwards by 12-13%. Despite the downward revision, the firm has increased the target price-to-book (P/B) ratio from 0.20x to 0.23x. This change reflects a more favorable view of the company due to more supportive policies anticipated in the industry.
The analyst from BofA Securities noted the reasons behind the revised price target, stating that the increase by 16% from $2.75 to $3.18 is due to a combination of Lufax's depressed valuation and its strong cash position. However, concerns remain regarding the company's prolonged weak profitability, which has led to the decision to reiterate a Neutral rating.
Furthermore, the analyst highlighted that the general offer from Ping An Group for Lufax is expected to close by October 28, 2024, with the offer price set at $2.254. This offer is part of the ongoing financial movements around Lufax and is a key factor for investors to consider as they assess the company's prospects and the analyst's revised expectations.
InvestingPro Insights
Recent InvestingPro data provides additional context to BofA Securities' analysis of Lufax Holding Ltd. The company's market capitalization stands at $2.57 billion, with a price-to-book ratio of 0.23, aligning closely with BofA's revised target P/B ratio. This valuation metric supports the analyst's view of Lufax's depressed valuation.
InvestingPro Tips highlight that Lufax is trading at a low Price / Book multiple, which corroborates BofA's assessment. Additionally, the stock has shown strong returns over the last month and six months, with price total returns of 39.21% and 58.66% respectively. This recent performance may have contributed to BofA's decision to raise the price target despite ongoing profitability concerns.
The data also reveals that Lufax's revenue for the last twelve months as of Q2 2024 was $4.85 billion, with a significant revenue decline of 36.75% over the same period. This aligns with the analyst's concerns about weak profitability and supports the downward revision of EPS forecasts.
Investors seeking a more comprehensive analysis can access 14 additional InvestingPro Tips for Lufax, providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.