JPMorgan analysts upgraded Futu Holdings (NASDAQ:FUTU) from Neutral to Overweight, setting a price target of $64.00.

The bank's assessment is based on the observation that Futu's share price has declined by 25% in the past two months, underperforming the S&P 500 by 31 percentage points. The analysts attributed this weakness to a modest shortfall in the company's third-quarter 2023 results and perceived risks to its net interest income (NII), which constituted about 55% of its revenue in the first nine months of 2023. These concerns have been linked to expectations of interest rate cuts.

However, the analysts believe that the market's reaction to these factors is exaggerated. They pointed out that only half of Futu's NII is sensitive to interest rates, and they anticipate that any negative impact on NII will be offset by an increase in trading volume.

Additionally, the analysts highlighted Futu's potential growth opportunities, particularly from its expansion into overseas markets like Japan and the anticipated launch of its cryptocurrency business in mid-2024. These developments could positively affect the growth of Futu's client base and assets under management (AUM).