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Futu Holdings Limited (NASDAQ:FUTU) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market may be pricing in some blue sky too, with the share price gaining 11% to US$48.55 in the last 7 days. Could this upgrade be enough to drive the stock even higher?
After the upgrade, the four analysts covering Futu Holdings are now predicting revenues of HK$3.8b in 2021. If met, this would reflect a huge 65% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 77% to HK$11.70. Prior to this update, the analysts had been forecasting revenues of HK$3.3b and earnings per share (EPS) of HK$9.46 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
Check out our latest analysis for Futu Holdings
With these upgrades, we're not surprised to see that the analysts have lifted their price target 13% to HK$346 per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Futu Holdings at HK$50.01 per share, while the most bearish prices it at HK$34.99. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Futu Holdings'historical trends, as next year's 65% revenue growth is roughly in line with 58% annual revenue growth over the past three years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.0% next year. So although Futu Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Futu Holdings could be worth investigating further.