Up 43% YTD, Can Futu Holdings Stock Sustain Momentum?

Chinese equities are experiencing a significant rally, leading investors to explore what may be undervalued stocks. Notable among these are Futu Holdings stock (NASDAQ: FUTU), which with gains of 9% today has added an impressive 43.47% year-to-date.

After such a rally, it is difficult to remain undervalued, yet the stock remains more than 30% down from the highs set back in 2021.

Futu Holdings operates as a prominent online brokerage and wealth management platform, catering to over 24 million users. The company facilitates commission-free trading across the U.S., Hong Kong, and mainland Chinese markets. As of now, its shares are priced at $114, contributing to a market cap of $15.72 billion. The company's shares trade at 27 times earnings, which is lower than the valuation of its U.S. counterpart Robinhood (HOOD), trading at 31 times earnings (after the recent 30% pullback).

Analysts paint a positive picture on the stock, collectively holding a price target of $127.98, more than 10% above the current price action. With some of the recent interest in Asian markets, the fundamentals in the upcoming earnings could shed further positive light on operations.

Their business models align with key growth trends in China, such as economic expansion and digital transformation, offering a solid opportunities amid the current market rally. With President Xi holding a symposium with business leaders in recent days, the sentiment around private industry has been growing increasingly positive.

The stock has previously found resistance above $120, with two tests of the range in October of last year, and earlier this month failing to hold. Whether upcoming earnings, scheduled for March 13th, and a continued desire for investors to invest into Chinese stocks can help push Futu to new highs is a cause of much debate, and one that is only likely to be answered in time.