On Tuesday, Citi updated its stance on Futu Holdings (NASDAQ:FUTU) Limited (NASDAQ:FUTU), raising the stock’s price target to $100 from the previous $75.30. The firm has maintained a Buy rating on the shares. The adjustment follows Futu's first-quarter 2024 performance, which showed a non-GAAP net profit after tax (NPAT) of HKD 1.12 billion. This figure represents an 18% increase from the previous quarter, despite a 12% decline year-over-year, accounting for 23% of the full-year 2024 Bloomberg estimate.
Futu's gross profit saw a sequential recovery, rising by 8.6% quarter-over-quarter to HKD 2.2 billion in the first quarter of 2024. However, this was still a 3.4% decrease compared to the same period the previous year. The improvement was largely driven by a significant uptick in trading volume, which saw a 40% increase from the previous quarter and a 9.5% rise year-over-year.
The increased trading activity in the first quarter was attributed to two main factors: a rebound in Hong Kong market sentiment starting in March and robust retail trading in the U.S. markets, particularly in cryptocurrencies and AI-themed stocks. These factors contributed to the heightened trading volumes experienced by Futu Holdings.
Additionally, the company's return on equity (ROE) experienced a recovery, reaching 17.9% in the first quarter of 2024. This represents a 2 percentage point increase from the previous quarter, although it is still 5.7 percentage points lower than the same period last year.
InvestingPro Insights
Following Citi's updated outlook on Futu Holdings Limited, an analysis of real-time data from InvestingPro provides additional context to the company's financial health and market performance. The company's market capitalization stands at an impressive $10.6 billion, reflecting significant investor confidence. With a P/E ratio of 19.34, Futu trades at a valuation that is attractive relative to its near-term earnings growth, indicating potential for investors looking for growth at a reasonable price. Moreover, the PEG ratio of 0.37 for the last twelve months as of Q4 2023 suggests that the company's earnings growth could outpace its P/E ratio, which may be appealing to value investors.
InvestingPro Tips highlight that Futu has not only been profitable over the last twelve months but also boasts a high return over the last year, with a 94.4% price total return, reinforcing the optimism reflected in Citi's report. Additionally, the strong return over the last three months, at 42.93%, aligns with the heightened trading activity and recovery in market sentiment mentioned in the article. It's worth noting that Futu does not pay dividends, which may be a consideration for income-focused investors.
For readers interested in a deeper dive into Futu's financials and market performance, there are additional InvestingPro Tips available at https://www.investing.com/pro/FUTU. And for those considering an InvestingPro subscription, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further insights that could inform investment decisions.
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