Bearish: Analysts Just Cut Their Futu Holdings Limited (NASDAQ:FUTU) Revenue and EPS estimates

One thing we could say about the analysts on Futu Holdings Limited (NASDAQ:FUTU) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Futu Holdings' 17 analysts is for revenues of HK$7.5b in 2022, which would reflect a solid 12% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be HK$19.53, approximately in line with the last 12 months. Before this latest update, the analysts had been forecasting revenues of HK$8.7b and earnings per share (EPS) of HK$22.62 in 2022. Indeed, we can see that the analysts are a lot more bearish about Futu Holdings' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Futu Holdings

It'll come as no surprise then, to learn that the analysts have cut their price target 23% to HK$461. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Futu Holdings analyst has a price target of HK$197 per share, while the most pessimistic values it at HK$27.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Futu Holdings shareholders.

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 would highlight that Futu Holdings' revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2022 being well below the historical 60% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 0.4% annually. So it's pretty clear that, while Futu Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Futu Holdings going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.