Key Takeaways:
- QFIN-S 1Q26 revenue of RMB3.909 billion beat estimates by 6.6%
- BofA raised its price target to HKD59.77, citing improved buyback stance
- Morgan Stanley maintained Overweight with a USD25 target on stabilization signals
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QFIN-S surges 20% as BofA raises target on buyback shift
QFIN-S shares jumped 20% to HKD59.1 after BofA Securities raised its price target, citing a more constructive management stance on share buybacks.
"Management adopted a more constructive stance on share buybacks, indicating that given the attractive valuation, share repurchases have once again become a viable option," BofA Securities said in a note, marking a shift from the more cautious tone in the prior quarter.
The fintech firm reported 1Q26 non-GAAP net profit of RMB946 million, near the upper end of its RMB900 million to RMB950 million guidance and 3.9% above consensus. Revenue fell 4.5% quarter-on-quarter and 16.7% year-on-year to RMB3.909 billion, still 6.6% above market expectations. BofA raised its 2026-28 EPS forecasts by 10% to 14% and lifted its Hong Kong-listed share target from HKD53.81 to HKD59.77, while keeping a Neutral rating. The US-listed share target for QFIN.US was increased to USD15.33 from USD13.80.
The rally puts QFIN-S at HKD59.1, near BofA's revised target, suggesting limited upside from current levels under the Neutral rating. Morgan Stanley maintained an Overweight rating with a USD25 target on QFIN.US, noting 1Q loan volume exceeded its forecast by 8.8% and that management expects marginal improvement to continue in the second quarter.
Loan volume in the first quarter declined 7.5% sequentially but surpassed Morgan Stanley's estimate by 8.8%, driven by increased technology solution loan volume. The company's GAAP net profit came in at RMB883 million, down 50.9% from a year earlier.
BofA's upgrade to its earnings forecasts reflects the first-quarter beat and the improved outlook for share repurchases. The bank had previously taken a cautious view after management signaled restraint on buybacks in the prior quarter.
The improved buyback stance signals management sees the stock as undervalued at current levels, offering a floor for the share price. Investors will watch second-quarter operating metrics for confirmation of the stabilization trend Morgan Stanley highlighted.
This article is for informational purposes only and does not constitute investment advice.
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