On Tuesday, Citi updated its assessment of UP Fintech Holding Ltd. (NASDAQ: TIGR) shares, reducing the price target to $5.00 from the previous $6.49 while maintaining a Buy rating on the stock.
The adjustment follows UP Fintech's second-quarter non-GAAP net profit report, which showed a significant decline both quarterly and year-over-year, coming in at $5.2 million—a 65% drop from the previous quarter and a 66% fall from the same period last year.
The decrease in net profit was largely attributed to a one-time provision of $13.2 million made for a legacy stock pledge business in Hong Kong, which was discontinued in 2023. UP Fintech, also known as Tiger Broker, has written off the troubled exposure in the second quarter.
This action was taken despite an undisclosed client's agreement to repay the loan fully by the end of 2025, with the client's controlling shareholder providing a repayment guarantee, which could potentially lead to a writeback of the provision in the future.
Excluding the one-off provision, UP Fintech's operating profit showed robust growth, increasing by 30.9% from the previous quarter and 68.2% from the second quarter of the prior year. The firm's performance was bolstered by solid trading volume and the expansion of its Mutual Fund Service License (MFSL) in the second quarter.
UP Fintech also reported a substantial increase in new paying customers, adding 48.9 thousand in the second quarter alone, which marks a 69.8% rise quarter-over-quarter and a 68.6% increase year-over-year. These new additions in the first half of 2024 make up 52% of the management's full-year guidance of 150 thousand new paying customers.
Looking ahead to the third quarter of 2024, UP Fintech's management anticipates further strength in trading volumes and revenue momentum compared to the second quarter.
The revised price target from Citi is derived from a discounted cash flow (DCF) model, taking into account the latest earnings revision while continuing to recommend a Buy position on the stock, albeit with a High Risk rating.
In other recent news, UP Fintech Holding Limited reported a record-breaking second quarter in 2024, with significant growth in revenue, newly funded accounts, and client assets.
The firm's commission income rose to $34.1 million, and total revenue for the quarter reached an all-time high of $87.4 million. Despite these gains, UP Fintech faced a challenge with a loss provision related to Hong Kong stock pledging.
Client assets showed considerable growth with a 121% increase compared to the previous year, totaling $38.2 billion. The company also reported a 69% sequential increase and a 68% year-over-year increase in newly funded accounts. Analysts noted that UP Fintech plans to introduce new product features and expand services to enhance the user experience.
However, the firm anticipates a potential 1% impact on total revenue for the fourth quarter due to a federal reserve recap. Despite this, UP Fintech plans to adjust its strategy to offset potential negative impacts on interest income. These developments are part of the recent news surrounding UP Fintech Holding Limited.
InvestingPro Insights
UP Fintech Holding Ltd. (NASDAQ: TIGR), also known as Tiger Brokers, is navigating a dynamic financial landscape, underscored by recent data and analyst insights. According to InvestingPro, analysts have a positive outlook on the company's profitability, forecasting that UP Fintech will be profitable this year. This aligns with the company's performance over the last twelve months, during which it has been profitable. However, investors should note that UP Fintech does not distribute dividends to its shareholders.
InvestingPro data highlights key financial metrics that provide a deeper understanding of UP Fintech's valuation and performance. The company boasts a market capitalization of $572.63 million and a Price to Earnings (P/E) ratio of 22.47, which adjusts to 21.49 when considering the last twelve months as of Q2 2024. Despite the lack of dividend payouts, the company's revenue growth is impressive, with a 12.96% increase over the last twelve months and an even more remarkable quarterly surge of 32.76% as of Q2 2024. These figures suggest a robust financial position and potential for further growth, which may reassure investors and align with Citi's continued Buy rating.
For those interested in further analysis and additional InvestingPro Tips, there are more insights available on UP Fintech at Investing.com/pro/TIGR. The comprehensive suite of tools and data on InvestingPro can offer investors a more nuanced perspective on the potential investment opportunities with UP Fintech.
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