On Tuesday, Citi upgraded its rating on shares of UP Fintech Holding Ltd. (NASDAQ: TIGR), cutting the price target to $5.00 from $6.49 previously while maintaining a Buy rating on the stock.
This adjustment follows UP Fintech’s second quarter non-GAAP net income report, which showed a significant decline both quarterly and year-over-year, coming in at $5.2 million, down 65% from the previous quarter and 66% from the same period last year.
The drop in net profit was largely attributed to a one-time $13.2 million provision made for a legacy stock pledge business in Hong Kong, which was discontinued in 2023. UP Fintech, also known as Tiger Broker, wrote off the troubled exposure in the second quarter.
This action was taken despite an undisclosed agreement by a client to repay the loan in full by the end of 2025, with the client’s majority shareholder providing a repayment guarantee, which could potentially lead to a reversal of the provision in the future.
Excluding the exceptional provision, UP Fintech’s operating profit recorded solid growth, up 30.9% from the previous quarter and 68.2% from the second quarter of the previous year. The company’s performance was bolstered by robust transaction volume and the extension of its mutual fund servicing license (MFSL) in the second quarter.
UP Fintech also reported a substantial increase in new paying customers, with 48,900 new paying customers in the second quarter alone, representing a 69.8% increase from the previous quarter and a 68.6% increase from the previous year. These new additions in the first half of 2024 represent 52% of management’s full-year guidance of 150,000 new paying customers.
For the third quarter of 2024, UP Fintech management anticipates a further increase in transaction volumes and revenue dynamics compared to the second quarter.
Citi’s revised price target is derived from a discounted cash flow (DCF) model, factoring in the latest earnings revision while continuing to recommend a Buy stance on the stock, albeit with a High risk rating.
In other recent news, UP Fintech Holding Limited reported a record second quarter in 2024, with significant growth in revenue, newly funded accounts and client assets.
The company’s fee income reached $34.1 million and total revenue for the quarter hit an all-time high of $87.4 million. Despite these gains, UP Fintech faced a challenge with a provision for losses related to the pledging of Hong Kong shares.
Customer assets saw significant growth with a 121% increase from the previous year, totaling $38.2 billion. The company also reported a 69% sequential increase and a 68% year-over-year increase in new funded accounts. Analysts noted that UP Fintech plans to introduce new product features and expand services to improve the user experience.
However, the company anticipates a potential 1% impact on total revenue in the fourth quarter due to a reassessment by the Federal Reserve. Despite this, UP Fintech plans to adjust its strategy to offset the potential negative impacts on interest income. These developments are among the recent news regarding UP Fintech Holding Limited.
Information about InvestingPro
UP Fintech Holding Ltd. (NASDAQ: TIGR), also known as Tiger Brokers, operates in a dynamic financial landscape, as highlighted by recent data and analyst analysis. According to InvestingPro, analysts have a positive view on the company’s profitability, predicting that UP Fintech will be profitable this year. This is in line with the company’s performance over the past twelve months, during which it has been profitable. However, investors should note that UP Fintech does not distribute dividends to its shareholders.
InvestingPro’s data highlights key financial metrics that provide insight into UP Fintech’s valuation and performance. The company has a market cap of $572.63 million and a price-to-earnings (P/E) ratio of 22.47, which adjusts to 21.49 if we consider the trailing twelve months as of Q2 2024. Despite the lack of dividend payments, the company’s revenue growth is impressive, with a 12.96% increase over the trailing twelve months and an even more remarkable 32.76% quarterly increase in Q2 2024. These numbers suggest a strong financial position and potential for further growth, which could reassure investors and align with Citi’s continued Buy rating.
For those interested in more in-depth analysis and additional InvestingPro advice, more information is available from UP Fintech at Investing.com/pro/TIGR. The complete suite of tools and data on InvestPro can offer investors a more nuanced perspective on potential investment opportunities with UP Fintech.
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