Key Takeaways
JPMorgan Chase downgraded Futu Holdings (NASDAQ:FUTU) to Neutral, cutting its price target by 71% as Chinese regulatory risks move to the forefront.
The downgrade, issued on May 22, reflects a significant shift in the bank's outlook for the online brokerage.
The bank’s analysts lowered their rating to Neutral from a previous Overweight and set a new price target of $87, a steep reduction from the prior $300 target. The new target implies a 2.5 percent downside from the stock's last closing price of $89.76.
The severe revision follows last week’s disclosure that Futu faces a probe from the China Securities Regulatory Commission (CSRC) related to its mainland China operations. The regulator proposed penalties totaling roughly $271 million and a personal fine against CEO Li Hua. The news sent shares plunging nearly 30% on Friday.
The downgrade from a major bank suggests the near-term regulatory headwinds are now the primary driver for the stock, outweighing user growth. Investors will be watching for management’s commentary on the regulatory situation when Futu reports its first-quarter results this Thursday.
This article is for informational purposes only and does not constitute investment advice.
