On Wednesday, Bofa Securities updated its outlook on Futu Holdings Limited (NASDAQ: NASDAQ:FUTU) shares, raising the price target to $85.80 from the previous $81.00 while maintaining a Buy rating on the stock.
The decision came after Futu Holdings Limited reported a 1Q24 GAAP net profit increase of 18.5% quarter-over-quarter, though there was a 12.9% year-over-year decline, resulting in a profit of HKD 1,038 million.
This performance slightly exceeded BofA Securities' expectations by 3%, primarily due to lower-than-anticipated Customer Acquisition Costs (CAC) and stricter cost control measures.
The company's revenue for the first quarter of 2024 showed growth of 9.2% quarter-over-quarter and 3.7% year-over-year, reaching HKD 2.6 billion, aligning closely with projections.
A significant highlight was the surge in new paying clients, which increased approximately 200% quarter-over-quarter and 330% year-over-year to 177,000 in 1Q24, surpassing the expected 136,000.
Encouraged by the strong year-to-date momentum, Futu Holdings has increased its full-year target for new paying clients from 350,000 to 400,000.
The company also reported a healthy growth in client assets, which rose by 7% quarter-over-quarter and 11% year-over-year to HKD 518 billion in the first quarter, buoyed by robust net asset inflows of more than HKD 35 billion, which helped to offset mark-to-market losses.
In light of these developments, BofA Securities has raised its earnings estimates for Futu Holdings for the years 2024-2026 by 3-5%.
Additionally, the target 2024E P/E multiple has been increased from 17.5x to 18.0x, reflecting the strong client growth. The price objective adjustment represents a 6% increase to the previous target.
BofA Securities reiterated its Buy rating on the stock, citing improving market sentiment and encouraging developments in overseas markets and new products as key factors supporting their positive outlook.
InvestingPro Insights
The latest data from InvestingPro underscores the robust financial health and promising growth potential of Futu Holdings Limited (NASDAQ:FUTU). With a market capitalization of $10.61 billion and a P/E ratio that stands at 19.35 for the last twelve months as of Q4 2023, the company is trading at a low P/E ratio relative to its near-term earnings growth. This aligns with the BofA Securities' increased earnings estimates and their adjusted P/E multiple for 2024.
InvestingPro Tips highlight that Futu has not only been profitable over the last twelve months but has also achieved a high return over the last year, with a 100.31% price total return as of mid-2024. The company's strong performance continues with a 17.82% return over the last month and a 43.7% return over the last three months, indicating a sustained upward trajectory in its stock value. Analysts from InvestingPro have predicted the company will remain profitable this year, which may reassure investors looking for consistent growth.
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