TLDR:
- Futu Holdings stock surged 43% week-to-date as of October 3, 2024
- JPMorgan analyst nearly doubled price target to $160
- Chinese government stimulus measures boosted financial services stocks
- Futu seen as beneficiary of improving retail sentiment in Greater China
- Stock reached intraday high of $124.41 on October 3, up 6% from previous close
Futu Holdings, the Chinese online brokerage firm, has seen its stock price skyrocket in recent days, driven by a combination of government stimulus measures and a significant analyst upgrade.
As of October 3, 2024, Futu’s stock had surged an impressive 43% week-to-date, according to data from S&P Global Market Intelligence.
The rally was fueled in part by the Chinese government’s latest economic stimulus package, which specifically targeted financial services companies like Futu.
The measures included interest rate cuts by the central bank and policy adjustments allowing qualifying institutional investors to borrow liquid assets from the central bank and sell them to build cash positions for stock investments.
Adding to the positive momentum, JPMorgan Chase analyst Katherine Lei nearly doubled her price target for Futu on Wednesday, raising it from $80 to $160 per U.S.-listed share. Lei maintained her overweight (buy) recommendation on the stock, citing improving retail sentiment in Hong Kong and mainland China as a key factor in her bullish outlook.
“We see Futu as a key beneficiary, as around 60% of its clients and over 80% of clients’ assets under management are from the Greater China regions,” Lei noted in her analysis.
The stock’s rapid ascent continued on October 3, with Futu shares reaching an intraday high of $124.41 before settling at $119.62, up 6% from the previous day’s close of $112.85. This placed the stock just 6.06% below its 52-week high of $127.33 and a remarkable 174.29% above its 52-week low of $43.61.
Trading volume was particularly heavy, with 13,007,264 shares changing hands – more than five times the average daily volume of 2,387,389 shares. This surge in activity reflects the heightened interest in Futu and other Chinese financial stocks following the government’s stimulus announcement.
Futu’s strong performance comes against the backdrop of broader market optimism surrounding Chinese stocks.
However, some analysts caution that the rally may be losing steam, as profit-taking sets in and investors reassess the long-term impact of the stimulus measures on China’s overall economic health.
As of October 3, Futu Holdings had a market capitalization of approximately $16.92 billion. The company’s price-to-earnings ratio stood at 32.48, with a price-to-earnings-growth (PEG) ratio of 1.04, indicating that the stock may still be reasonably valued despite its recent gains.
While the short-term outlook for Futu appears positive, investors should note that the average price target among 15 analysts covering the stock is $81.87, suggesting potential downside from current levels.
However, the range of estimates varies widely, from a low of $50.68 to a high of $90.73, reflecting the uncertainty surrounding the stock’s future performance.
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