BofA Securities has updated its outlook on shares of Futu Holdings Limited (NASDAQ: NASDAQ:FUTU), increasing the price target to $80.20, up from the previous target of $77.60.
The firm has maintained a Buy rating on the stock. The adjustment follows Futu's management expressing confidence in reaching their target of 550,000 new paying clients in FY24, despite potential uncertainties from the U.S. election in the fourth quarter.
According to the firm's analysis, Futu Holdings is expected to maintain a similar pace of new paying client acquisition in the second half of the year as in the first half. The company has a history of providing cautious guidance, which suggests that the third-quarter performance regarding new paying clients could remain robust, notwithstanding the traditional low season in the fourth quarter.
Futu reported strong net client asset inflows, approximately HKD 50 billion in the second quarter of 2024, and over HKD 80 billion in the first half of the year. This represents a significant increase from around HKD 70 billion for the full year of 2023. The inflow of client assets continued to be strong into the third quarter, with a run rate just slightly below that of the second quarter.
The trading velocity and volume have also increased quarter-to-date, as clients were actively trading amidst market volatility. However, the commission rate is expected to see a slight decline in the third quarter due to a decrease in the trading of low-value meme stocks and lower commission rates for options trading.
In other recent news, Futu Holdings displayed remarkable growth in the second quarter of 2024, reporting an increase in both paying clients and net income. The tech-driven online brokerage firm witnessed a 29% year-over-year growth, reaching over 2 million paying clients, and an 8% increase in net income, totaling HKD1.2 billion. These recent developments also led to the company raising its full-year guidance for new paying clients to 550,000, following a 168% year-over-year increase this quarter.
InvestingPro Insights
As BofA Securities raises its price target for Futu Holdings Limited (NASDAQ:FUTU), it's worth noting that the company's stock is trading at a low P/E ratio relative to its near-term earnings growth, according to InvestingPro data. With a P/E ratio of 15.54 over the last twelve months as of Q1 2024, Futu's valuation is attractive, especially when considering the 11.37% revenue growth during the same period. These figures underscore the firm's confidence in Futu's client acquisition and financial performance.
InvestingPro Tips also highlight that despite a price drop over the past three months, analysts predict Futu will be profitable this year. The company's profitability over the last twelve months and its impressive return on assets at 3.85% suggest a robust financial health. Moreover, with a strong return over the past five years and no dividend payouts, Futu is reinvesting its earnings to fuel growth, aligning with the firm's optimistic outlook.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that could further inform investment decisions. The platform offers a comprehensive set of tips, which can be accessed through the dedicated InvestingPro product page for Futu Holdings.
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