The rocket fuel provided by the Chinese government’s stimulus was only one factor in the company’s pop.
A monster analyst price target increase, combined with recent market-shaking news from its home government, helped push Futu Holdings (FUTU 8.81%) stock notably higher in value across the past few trading days. As of late Thursday afternoon, the Chinese online brokerage’s shares were up by a very impressive 43% week to date, according to data compiled by S&P Global Market Intelligence.
(Almost) doubling down
On Wednesday, JPMorgan Chase‘s Katherine Lei nearly doubled said Futu price target. She lifted it to $160 per each of the company’s U.S.-listed shares, maintaining her overweight (buy, in other words) recommendation as she did so.
Lei acknowledged the share price leaps Futu already experienced during the late September/early October rally on the back of Beijing’s latest package of economic stimulus measures.
Regardless, she feels the stock has more room to run because “retail sentiment is improving in Hong Kong Special Administrative Region and mainland China, and we see Futu as a key beneficiary, as around 60% of its clients and over 80% of clients’ assets under management are from the Greater China regions.”
It’s nice to be in the right club
Financial services companies like Futu were particularly targeted for stimulus measures by the Chinese government. Not only is the nation’s central bank cutting interest rates, it’s adjusting its policies to allow qualifying institutional investors to borrow liquid assets from the central bank itself, then sell them in order to build their cash positions for stock investments.
It’s little wonder then that Futu and many sector peers were heading well skyward during the week. The rally seemed to be fizzling on Thursday, no doubt because of profit-taking and a growing realization that the stimulus package isn’t the magic move that will instantly fix all parts of the stumbling domestic economy.
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.