Shares of KE Holdings (BEKE 3.76%), the largest real estate platform in China, traded as much as 11.5% higher this morning after an analyst at Goldman Sachs upgraded the stock.
Goldman analyst Elsie Cheng upgraded KE Holdings, which operates China's leading real estate brokerage brand, from a neutral rating to a buy rating, sending shares higher.
The company has been around for about two decades and went public last August, pricing its IPO at about $20 per share. Today, KE Holdings trades for more than $59 per share.
Investors have been excited about KE's online platform called Beike that pairs homebuyers with renters, and the company has been compared to the U.S. real estate brokerage Redfin (RDFN 3.81%).
"We remain optimistic on Beike's tech-driven operational know-how in secondary housing transactions to drive continued efficiency gains at its network stores, as well as its ability to deliver higher value-add to developers amid a tightening property financing regulatory environment," Cheng wrote in her report.
In the third quarter of 2020, KE Holdings generated gross transaction value equivalent to more than $154 billion, a more than 87% increase year over year.
While some Chinese regulators have warned about a potential bubble in the country's real estate market, longer-term bond yields in China have not risen as significantly as they have in the U.S.
Lower bond yields typically promote more home buying and China's real estate is expected to continue to grow, which bodes well for the company. KE Holding will report fourth-quarter and full-year earnings on Monday.