Even though the prolonged low-interest rate environment and rising uncertainties regarding the pace of global economic recovery are unfavorable for financial services companies, increasing financial transactions and capital market activities have been helping…
the industry attract increased investor attention lately. This is evidenced by the Financial Select Sector SPDR ETF’s (XLF) 5% gains over the past month compared to the SPDR S&P 500 Trust ETF’s (SPY) 1.8% returns.
Furthermore, the Federal Reserve could raise interest rates as soon as early 2023 and recently indicated its willingness to reduce asset purchases before the end of the year, moves that should be a boon for the financial services industry. Moreover, the industry is expected to benefit from the continued integration of advanced technologies. According to a Globe Newswire report, the global financial services market is expected to grow at a 9.9% CAGR to hit $22.5 trillion this year.
Given the financial services industry’s promising prospects, Wall Street analysts are highly optimistic about the upside potential of 360 DigiTech, Inc. (QFIN – Get Rating) and Patria Investments Limited (PAX – Get Rating). So, we think it could be worth adding these names to one’s watch list now.
Headquartered in Shanghai, China, QFIN operates a digital consumer finance platform under the 360 Jietiao brand. Its platform provides online consumer finance products to borrowers funded by institutional partners.
On August 9, 2021, QFIN announced that its 360 Jietiao app was being restored to app stores for downloads. It was earlier temporarily taken offline by the Cyberspace Administration of China. The company said the temporary suspension of new downloads did not have a materially adverse impact on its operations.
QFIN’s total revenue increased 19.8% year-over-year to $619.76 million for the second quarter, ended June 30, 2021. The company’s operating income came in at $287.01 million, representing an 86.6% year-over-year increase. While its net income increased 76.6% year-over-year to $239.74 million, its EPS came in at $0.74, up 67% year-over-year.
Analysts expect QFIN’s EPS and revenue to increase 722.9% and 630.9%, respectively, year-over-year to $31.68 and $15.39 billion, in its fiscal year 2021. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters.
The stock has gained 81.8% in price year-to-date to close yesterday’s trading session at $21.44. Wall Street analysts expect the stock to hit $40.05 in the near term, which indicates a potential 86.8% upside.
Based in Grand Cayman, the Cayman Islands, PAX is a private market investment firm focused on investing in Latin America. The company offers asset management services to investors, focusing on private equity funds, infrastructure development funds, co-investments funds, constructivist equity funds, and real estate and credit funds.
On August 19, 2021, PAX agreed to…
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