On Friday, JPMorgan (NYSE:JPM) shifted its stance on HKBN Ltd. (1310:HK) (OTC: HKBNF), upgrading the stock from Underweight to Neutral. This change comes with a significant increase in the price target, now set at HK$3.70, up from the previous HK$2.20. The upgrade was influenced by HKBN's solid performance in the second half of the fiscal year 2024, which saw improvements in both residential and enterprise segments, an EBITDA rebound, and the company's first dividend per share (DPS) increase in three years.
The analyst from JPMorgan acknowledged the company's recent financial results and the positive momentum in its business operations. The raised price target to HK$3.70, effective December 2025, reflects a more optimistic revenue forecast and expectations for the dividend per share in the coming years. The adjustment in the price target is a response to the company's ability to deliver on its financial metrics and the anticipated positive impact on the share price following the earnings report.
HKBN's recent earnings report indicated a turnaround in its business, prompting JPMorgan to close its Underweight call. The analyst expressed a belief that the market would respond well to HKBN's financial results. The upgrade to Neutral suggests a shift in expectations, as the company's performance has begun to align more closely with the broader market's standards.
While the upgrade signifies a positive outlook for HKBN's stock, the JPMorgan analyst also pointed out potential risks that could affect the company's share price. Concerns include the sustainability of the business recovery, market interest rate volatilities, and the possibility of unfavorable terms in debt refinancing. These factors could pose downside risks and are important considerations for the future trajectory of the stock.
In summary, JPMorgan's upgrade of HKBN to Neutral and the new price target of HK$3.70 reflect a more favorable view of the company's financial health and prospects. The analyst's comments highlight both the achievements of HKBN in recent months and the challenges it may face moving forward.
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