BofA analyst Emma Xu downgraded Futu Holdings (FUTU) to Underperform from Buy with a price target of $27, down from $59.60, after the China Securities Regulatory Commission said it will ask Futu and Tiger (TIGR) to correct what the regulator calls "illegal acts" in their cross-border securities business. Xu, who update her model to reflect expectations for an "orderly unwind," assumes that China clients in 2023 and 2024, trading velocity lowers to reflect negative sentiment from the CSRC’s actions and that compliance costs increase. Xu, who cut her earnings estimates by 25% and 37%, respectively, for 2023 and 2024, has also switched her valuation method due to "Futu’s less attractive growth profile," she tells investors.
Published first on TheFly
See Insiders’ Hot Stocks on TipRanks >>
Read More on FUTU:
- Daiwa says ‘stay calm,’ Futu regulation removes overhang
- Futu Holdings put volume heavy and directionally bearish
- Futu Provides Regulatory Update in China
- Futu Holdings to ‘fully cooperate’ with CSRC, ‘take all necessary measures’
- Futu, UP Fintech told by regulator to stop ‘illegal’ activities, Bloomberg says