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Why Shares of KE Holdings Are Rising Today

By Bram Berkowitz – Nov 9, 2021 at 3:31PM

Key Points

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The company reported third-quarter earnings results, and an analyst weighed in on the company's outlook.

What happened

Shares of the Chinese online real estate platform KE Holdings (BEKE -0.99%) traded 11.6% higher as of 3:02 p.m. EST after the company reported earnings for the third quarter of 2021. An analyst also upgraded its outlook on the stock.

So what

KE Holdings delivered a loss of earnings per American depositary share equivalent to $0.23 on total revenue equivalent to $2.8 billion. Earnings per share missed analyst estimates, while revenue beat.

The loss in the quarter grew significantly from the third quarter of 2020, while total revenue dropped nearly 12% from the same time period. Management is also guiding for fourth-quarter net revenue to drop by more than 30% from the fourth quarter of 2020.

However, analysts at J.P. Morgan today upgraded KE Holdings from a neutral rating to overweight and assigned the company a $30 price target, which implies a roughly 50% upside from its current price.

Blue line with arrow moving upward.

Image source: Getty Images.

Now what

KE Holdings has been wildly volatile this year, at one point trading at nearly $77 per share before falling as low as roughly $17 per share. The problem has been regulators, which have been trying to temper China's shaky housing market.

There's a lot of opportunity in the Chinese real estate market, and KE Holdings is clearly a large player, but unless you really understand how regulation impacts this company, I'd steer clear of KE Holdings because things can change very quickly. 

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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