BofA Initiates Buy For Futu Holdings On Growth Momentum

Futu Holdings Ltd FUTU provides a comprehensive online financial services platform that is expanding to capture investment demand from more countries, according to BofA Securities.

The Futu Holdings Analyst: Emma Xu initiated coverage of Futu Holdings with a Buy rating and a price target of $195.

The Futu Holdings Thesis: Although the company generated a 95% compounded annual growth rate in paying clients between 2016 and 2020 to 517,000, this represents merely 4.3% of its user base, Xu said in the initiation note.

The analyst mentioned 5 reasons for the Buy rating:

• The company’s fast-growing client base and large addressable market
• Operating leverage it has from cross-selling opportunities and economies of scale
• Technology leadership given its “first-mover advantage, Tencent’s support and continued R&D investments”
• Increased user engagement and retention from its social community
• “Upside from U.S. self-clearing system in the near term and wealth management platform in the medium term.”

“We forecast EPS to grow at 57% CAGR in 2020-23E. Our 2021E earnings are based on 700k new paying clients, and QoQ decline in average assets per client and trading velocity,” she further wrote.

FUTU Price Action: Shares of Futu Holdings had risen by 0.69% to $144.80 at the time of publication Monday.

(Photo: Scott Graham via Unsplash)