Investing.com – Goldman Sachs downgraded Futu Holdings Limited () to Neutral from Buy, cutting its price target to $102.13 from $210.47. The stock plunged to $89.76, down 31.85% over the past week, according to InvestingPro data.
Analyst Shuo Yang cited elevated regulatory uncertainty as the reason for the downgrade, though the firm expects current capital market sentiment will support continued earnings growth.
Goldman Sachs reduced its revenue forecasts for 2026, 2027 and 2028 by 16%, 14% and 14% respectively. The firm cut net profit estimates by 26%, 20% and 20% for the same periods.
The revised forecasts account for regulatory uncertainty including fines announced by Futu and the remediation of non-compliant mainland client accounts. The estimates also reflect an increase in client acquisition cost in new markets alongside a decline in new client assets under management per paying client.
Goldman Sachs applied a 2027 price-to-earnings valuation multiple of 10 times, down from 19 times previously. The firm’s 2026 and 2027 earnings per share estimates are now 27% and 24% below Bloomberg consensus. The stock currently trades at a P/E ratio of 8.84, and InvestingPro analysis suggests the stock is undervalued relative to its Fair Value. For deeper insights, investors can access FUTU’s comprehensive Pro Research Report, one of 1,400+ available on the platform.
In other recent news, Futu Holdings Limited has repurchased approximately $160 million worth of its American depositary shares under its share repurchase program. This development comes amid regulatory challenges as the China Securities Regulatory Commission (CSRC) plans to penalize Futu Holdings for operating without proper licenses in mainland China. The CSRC has issued a notice of investigation and administrative penalty, citing violations of several Chinese laws. These regulatory issues have led to a significant drop in U.S.-listed shares of Futu Holdings and other Chinese brokerages.
The CSRC intends to confiscate illegal gains and impose penalties on Futu Holdings, , and Longbridge Securities for unauthorized operations. Despite these challenges, Morgan Stanley has reiterated an Overweight rating on Futu Holdings with a price target of $225.00, noting that mainland customers represent less than 20% of the company’s total assets. The crackdown requires cross-border brokers to close existing mainland client accounts within two years. As these events unfold, Futu Holdings continues to navigate the complexities of regulatory compliance in its operations.
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