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On Tuesday, Citi analysts increased their price target on Qifu Technology (NASDAQ: QFIN) shares to $58.50 from the previous $55.00, while reiterating a Buy rating on the stock. According to InvestingPro data, the stock currently trades at an attractive P/E ratio of 7.5x, with analysts’ targets ranging from $48.44 to $60.50, suggesting potential upside from current levels. The adjustment comes after Qifu Technology reported its first-quarter non-GAAP net profit after tax (NPAT) at RMB1.93 billion, which is slightly above the upper end of management’s guidance range of RMB1.8 billion to RMB1.9 billion. The company maintains strong financial health, with InvestingPro analysis showing a "GREAT" overall financial score of 3.15 out of 4, supported by robust profitability and momentum metrics.
The company’s first-quarter performance reflected a substantial increase in stock-based compensation, which surged by 117% quarter-over-quarter and 190% year-over-year. However, when examining the GAAP NPAT, which stood at RMB1.8 billion for the first quarter, it reveals a 6.1% decline from the previous quarter but a 54.6% rise from the same period last year. This GAAP figure aligns with the expectations previously set forth.
Qifu Technology’s net revenue after provision saw a 5.2% quarter-over-quarter growth, reaching RMB3.5 billion. This growth was attributed to an increase in risk-taking loan volume during the quarter, which typically yields a higher revenue take rate. Despite the net take rate for the first quarter exceeding expectations at 5.6%, compared to the estimated 5.2%-5.3%, this was primarily due to the significant rise in stock-based compensation. Without this factor, the net take rate would have normalized to 5.2% for the quarter, down from 6% in the fourth quarter of 2024, which aligns with management’s guidance of a 5%-5.2% net take rate for the full year 2025.
In addition to these financial metrics, Qifu Technology has also issued a cash-par convertible bond. As a result, the company has provided guidance indicating a reduction in share count by more than 11% for the year 2025. The stock has demonstrated remarkable performance, delivering a 122.9% return over the past year. Get access to 10+ additional InvestingPro Tips and comprehensive analysis in the Pro Research Report, helping you make more informed investment decisions. This strategic financial maneuver is expected to impact the company’s share structure and potentially its market valuation.
In other recent news, Qifu Technology has successfully completed a convertible senior notes offering, raising $690 million. The net proceeds from this offering will support the company’s share repurchase plan, with expectations that it will positively impact its 2025 earnings per American Depositary Share (ADS). The notes, carrying an interest rate of 0.50% per annum, will mature in 2030 unless repurchased, redeemed, or converted earlier. Analysts have responded positively to these developments. BofA Securities increased the price target for Qifu Technology to $52.70, maintaining a Buy rating, while Jefferies raised its target to $50.00, also reiterating a Buy rating. Jefferies highlighted Qifu Technology’s strong fourth-quarter results and favorable guidance for the first quarter of 2025. The company’s effective use of artificial intelligence and robust business execution were noted as key factors in its performance. The share buyback program and the strategic financial moves are seen as strong commitments to enhancing shareholder value.
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