On Wednesday, BofA Securities updated its outlook on Futu Holdings Limited (NASDAQ:FUTU), a leading tech-driven online brokerage firm. The firm's analyst has increased the price target on the company's stock to $108.00, up from the previous $90.00, while maintaining a Buy rating. This adjustment reflects a 20% increase in the price objective and is based on revised earnings estimates and valuation multiples.
The analyst's decision to raise the price target is attributed to an updated earnings forecast for the years 2024 to 2026, which sees an increase of 3-12%. The revised estimates are primarily due to a higher assumption of trading velocity. In addition, the target price-to-earnings (P/E) multiple was increased from 18 times to 20 times earnings. This valuation is considered reasonable when compared to the P/E multiples of U.S. online brokers, which range between 21 to 37 times, and Chinese online brokers with a P/E multiple around 36 times.
In the commentary provided, the analyst noted that despite potential short-term risks, the long-term market outlook appears favorable. The analyst cited a report by the firm's China Strategy Team, titled "Be long-term greedy, short-term cautious," which suggests that market upside risks could emerge over the long term. As a result, Futu Holdings, with its diversified market exposure, is expected to benefit in the long run.
The analyst also reiterated a Buy rating on Futu Holdings, highlighting the company's diversified market exposure and robust growth in clients and assets under management (AUM). Positive developments in overseas markets and new product offerings, along with improving market sentiments in Hong Kong and China, were also mentioned as factors underpinning the optimistic view on the stock.
The revised price target and the maintained Buy rating reflect a positive outlook on Futu Holdings' future performance, considering both its earnings potential and strategic market positioning.
In other recent news, Futu Holdings has been the focus of positive analyst outlooks and strong earnings results. JPMorgan has raised its stock price target for Futu Holdings from $88.00 to $160.00, maintaining an Overweight rating. This adjustment reflects an 82% increase in the price target, with the firm's optimism driven by improving retail sentiment in Hong Kong SAR and mainland China.
Similarly, BofA Securities has adjusted its outlook on Futu Holdings, raising the stock's price target to $90.00 from the previous $80.20, and maintaining a Buy rating. The firm has updated Futu's earnings estimates for 2024-2026, reflecting an increase in client assets and higher trading velocity.
In addition to these positive analyst outlooks, Futu Holdings has reported significant growth in the second quarter of 2024. The company saw a 29% year-over-year growth, reaching over 2 million paying clients, and an 8% increase in net income, totaling HKD1.2 billion. Following this strong performance, the company raised its full-year guidance for new paying clients to 550,000.
These recent developments come amidst a backdrop of strong net client asset inflows and the launch of cryptocurrency trading in Hong Kong and Singapore.
InvestingPro Insights
Recent InvestingPro data aligns with BofA Securities' optimistic outlook on Futu Holdings Limited (NASDAQ:FUTU). The company's market capitalization stands at $13.47 billion, with a P/E ratio of 24.37, indicating investor confidence in its growth potential. This valuation is consistent with the analyst's view that Futu's P/E multiple is reasonable compared to industry peers.
Futu's strong financial performance is evident in its revenue growth of 21.5% in the most recent quarter, and an impressive operating income margin of 52.84% over the last twelve months. These metrics support the analyst's decision to raise earnings estimates for the coming years.
InvestingPro Tips highlight Futu's robust performance, noting strong returns over various timeframes, including a 67.21% return over the last month and a 75.63% return over the last six months. This aligns with the analyst's long-term optimistic view on the stock. Additionally, the tip indicating that Futu is profitable over the last twelve months corroborates the analyst's positive earnings outlook.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on Futu Holdings, 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.