Goldman Sachs Upgrades Futu Holdings Limited (FUTU) to Buy

Goldman Sachs analyst Shuo Yang upgraded Futu Holdings Limited (NASDAQ: FUTU) from Neutral to Buy with a price target of $213.39 (from $157.85).

The analyst comments: "Our investment thesis is based on: 1. Continued client expansion amid favorable market expectations: We forecast FUTU will add 802k and 659k new paying clients in 2026E and 2027E, representing growth of 24% and 16% to its existing client base. Contrary to market perception, we believe FUTU can maintain growth in favorable periods (e.g. 2026) and capitalize on IPO upcycles for rapid client acquisition.
2. Durable competitive advantages: FUTU's ability to grow stems from its product and service competitiveness, which drives high client retention and new acquisitions. Unlike traditional financial institutions, FUTU is a low-fee, convenience-driven discount broker. Compared to large fintech companies like Ant Group, FUTU boasts high client retention and sufficient cash for client acquisition. Comparing against peers like TIGR, East Money, IBKR and HOOD, FUTU enjoys a higher ROE, operates in distinct competitive regions, and has higher operational efficiency with more incremental business lines.
3. Likely limited impact from Fed rate cuts: While interest income constitutes 40% of revenue, we see limited impact on profitability from potential Fed rate cuts. We estimate a cut of 50bps could reduce 2026E revenue by approximately HK$435mn or 2% of revenue. However, historically, rate cuts boost market trading sentiment. We calculate that a +3% increase in trading volume or a +0.5x increase in turnover rate could offset this revenue impact.
4. Digital assets as a future growth driver: FUTU currently offers retail crypto trading but not B2B infrastructure. Therefore, merely shifting existing client AUM between stocks and crypto trading offers limited profit growth due to fee rate differentiation. We expect more significant growth to come from crypto trading, thereby attracting new clients and additional AUM."

For an analyst ratings summary and ratings history on Futu Holdings Limited click here. For more ratings news on Futu Holdings Limited click here.

Shares of Futu Holdings Limited closed at $162.57 yesterday.

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