Jefferies takes a cautious stance on Lufax stock as consumer financial crisis causes losses Investing.com
On Thursday, Jefferies returned the news coverage Company Lufax Holding Ltd (NYSE: NYSE:) stock with a hold rating, set a target price of $3.20. The financial services company, which specializes in personal financial services in China, recently reported third-quarter results that fell short of market expectations for both revenue and profit.
The conversion of Lufax to consumer currency is done carefully for small business owners (SBO). The company’s adoption of early recognition of credit loss accounting under the full guarantee model resulted in increased costs and net losses at this early stage of its strategic change.
Looking ahead, Jefferies predicts a return to growth in Lufax’s loan volume in 2025 after the completion of its transition period. However, the company also pointed out that more information is needed to fully understand Lufax’s path to profitability.
The consolidated return follows a period in which Lufax has been navigating various macroeconomic headwinds, which have impacted its business performance and financial performance. The hold ratio indicates a neutral stance on the stock, suggesting that the analyst does not see a strong opportunity to buy or sell at the current time and price level.
In other recent news, Lufax Holding Ltd, a personal financial services platform in China, reported mixed results for the third quarter. Despite strong asset quality and lower financing costs, the company lost a total of RMB 725 million. Lufax’s total new loans sold in Q3 remained consistent with last year at RMB 50.5 billion, marking an 11.7% increase over the previous quarter. Consumer finance company loans have grown significantly, growing 27.8% year over year and now representing 52% of total new loans.
At the same time, Jefferies reversed coverage of Lufax, assigning a hold rating to the company’s stock. The return comes on the heels of Lufax’s Q3 results, which fell short of market expectations in terms of revenue and earnings. The company is currently transitioning to consumer finance, which has resulted in increased costs and net losses at the start. Jefferies expects positive loan-to-value growth in 2025 after the transition is completed, but wants more clarity on Lufax’s path to profitability.
These are the latest developments that investors should consider as they monitor Lufax’s progress and financial health in the context of ongoing strategic adjustments.
InvestingPro Insights
The latest data from InvestingPro sheds more light on Lufax Holding Ltd’s financial position and market performance. The company’s market capitalization reaches $2.5 billion, reflecting its current position in the Consumer Finance industry. Notably, Lufax trades at a low Price/Book multiple of 0.21, which is consistent with the cautious approach mentioned in the article.
InvestingPro Tips highlights that analysts expect sales to decline this year, confirming the challenges discussed in Jeffery’s analysis. This expectation is also supported by the revenue growth data, which shows a significant decrease of 35.28% in the last twelve months from Q3 2024.
Despite these challenges, Lufax has shown strong short-term market performance, with a 14.68% gain in the last month and a 38.41% gain over the past six months. This recent positive momentum may be an indication of the market’s optimism about the company’s ongoing turnaround.
For investors looking for a comprehensive analysis, InvestingPro offers 13 additional tips for Lufax Holding Ltd, which provide a deeper understanding of the company’s financial health and market conditions.
This article was created with the support of AI and reviewed by an editor. For more information see our T&C.
