BofA raises Futu stock price target to $129.50, maintains Buy

On Tuesday, BofA Securities analyst Emma Xu increased the price target for Futu Holdings Limited (NASDAQ:FUTU) shares to $129.50, up from the previous $108.00, while reiterating a Buy rating on the stock. The stock, currently trading at $107.60, has shown impressive momentum with a 34.52% gain year-to-date. According to InvestingPro, the company’s next earnings report is scheduled for March 12, with several key metrics expected to show significant growth. InvestingPro analysis indicates the stock is fairly valued at current levels, with a GREAT overall Financial Health Score of 3.3.

Futu is projected to see a substantial rise in new paying clients, with an estimated 30% quarter-over-quarter and 240% year-over-year increase, totaling around 200,000 in the fourth quarter. Additionally, total client assets are expected to grow by approximately 7% quarter-over-quarter to about HKD 740 billion. This growth is attributed to robust asset inflows, estimated to be greater than HKD 60 billion, despite market-to-market losses. The company’s strong execution has helped maintain its impressive 92.83% gross profit margin, as revealed in InvestingPro’s detailed financial analysis. For deeper insights into Futu’s growth metrics and over 10 additional ProTips, subscribers can access the comprehensive Pro Research Report.

Despite a slight decline in Hong Kong stock holdings, as indicated by the Central Clearing and Settlement System (CCASS), Futu’s U.S. stock holdings are expected to have increased, reflecting an eventful quarter in which the S&P 500 and NASDAQ indices rose by 2% and 6%, respectively. Moreover, the annualized trading velocity is forecasted to climb from 13.9x in the third quarter to 18.5x in the fourth quarter, bolstered by more active trading across Hong Kong/China ADRs and U.S. markets. This is anticipated to result in a trading volume surge of roughly 50% quarter-over-quarter, reaching HKD 2.84 trillion.

The commission rate is expected to dip slightly from 8.0 basis points in the third quarter to 7.5 basis points in the fourth quarter, as a result of increased trading in high-priced U.S. stocks and options, as well as a higher mix of cash trading versus derivative trading. Consequently, brokerage income is projected to grow by 39% quarter-over-quarter to approximately HKD 2.1 billion.

Interest income is also forecasted to increase by 3% quarter-over-quarter to around HKD 1.7 billion, driven by a growing idle cash balance and average margin financing stock lending balance, which should help offset a declining interest rate. As a result, total revenue is expected to grow by 21% quarter-over-quarter to about HKD 4.2 billion. The gross margin is anticipated to remain stable at around 82%, with gross profit rising by 21% quarter-over-quarter.

Selling and marketing expenses are estimated to rise by about 3% quarter-over-quarter, in line with the increase in new paying clients and a lower client acquisition cost per paying client. Research & Development (R&D) and General & Administrative (G&A) expenses could see a roughly 30% quarter-over-quarter increase, partly due to one-off employee optimization costs. Additionally, the unrealized foreign exchange losses recorded in the third quarter are expected to reverse in the fourth quarter with the depreciation of RMB/SGD.

The analyst’s forecast for GAAP and non-GAAP net profit in the fourth quarter of 2024 shows an impressive growth of 40% and 38% quarter-over-quarter, reaching approximately HKD 1.85 billion and HKD 1.94 billion, respectively. Observers are advised to look out for management’s guidance on net asset inflows trend, plans for the 2025 new paying clients, R&D, client acquisition costs, and business trends for the first quarter of 2025 during the upcoming earnings briefing, with expectations for the positive momentum to continue into the first quarter of the year.

In other recent news, IceCure Medical (TASE:PMCN) has appointed Mr. Li Haixiang, founder and managing partner of Virtus Inspire Ventures, as a new director on its board. This development is part of IceCure Medical’s ongoing efforts to bolster its leadership and strategic direction.

Turning to Futu Holdings Limited, the company has been the focus of several analyst adjustments. Jefferies has raised its price target to $109.20 and maintained a Buy rating, following the release of Futu’s third-quarter results which showed revenues surpassing both consensus and Jefferies’ own forecasts.

On the other hand, Citi has revised its stance on Futu Holdings, downgrading the stock from Buy to Neutral, but increasing the price target to $95 from $79. This change follows an announcement of a record-high quarterly non-GAAP net profit after tax for the third quarter of 2024.

In addition, Morgan Stanley (NYSE:MS) has upgraded Futu from Equalweight to Overweight, significantly increasing the price target to $115. This adjustment reflects confidence in the brokerage’s expansion, particularly in Singapore, and potential for overseas growth.

Finally, Deutsche Bank (ETR:DBKGn) has maintained a positive stance on Futu Holdings, raising its price target to $118.40 while keeping a Buy rating, ahead of the company’s third-quarter earnings report. These are recent developments that provide investors with an update on these companies’ progress.

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