Futu Holdings: Q1 Beat Is Overshadowed By Mixed Full-Year Outlook (Rating Downgrade)

Summary

• My rating for Futu is revised from a Buy to a Hold, after considering its performance and prospects.
• FUTU's Q1 2025 earnings exceeded expectations by 3%, as its commission fees more than doubled YoY in the same time frame.
• The company's FY 2025 results will be boosted by market volatility and a strong Hong Kong ("HK") IPO pipeline, but increased competition and declining interest rates in HK could be substantial headwinds.
• Futu is trading at a similar P/E as its Chinese online broker peer UP Fintech, which suggests that the former is reasonably valued.
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.