Futu cut to Neutral at Citi even after solid Q3 results; stock slides

Futu Holdings (NASDAQ:FUTU) shares retreated 5.8% in Tuesday afternoon trading, even after the Hong Kong-based online brokerage delivered solid Q3 results and declared a special cash dividend.

Nonetheless, with the stock up some 60% this year alone, outpacing the stock market by nearly 3x, Citi analyst Judy Zhang downgraded Futu (NASDAQ:FUTU) shares to Neutral/High Risk.

But the analyst lauded the company’s Q3 results, showcasing record-high quarterly profit. Strong trading volume and continued net interest margin expansion during the three-month period drove solid gross profit growth, she highlighted in a note.

In conjunction with its quarterly report, Futu (FUTU) said its board approved a special cash dividend of $2 per American Depository Share to holders of ADSs of record as of the close of business on Dec. 6, 2024, payable in U.S. dollars.

This kind of payout “is a first in the company’s history vs. previously Futu has relied exclusively on share buybacks for shareholder return program,” the Citi note said.

Citi’s Neutral rate aligns with the SA Quant system rating of Hold and differs with the average Wall Street analyst rating of Strong Buy.