Analyst James Friedman from Susquehanna reiterated a Buy rating on Nu Holdings (NU – Research Report) and increased the price target to $14.00 from $12.00.
James Friedman has given his Buy rating due to a combination of factors that indicate a robust upward trend for Nu Holdings. This assessment comes after observing a series of positive key performance indicators (KPIs) in the company’s recent quarterly report. Specifically, there was a notable increase in active customers, which rose by 27%, and an acceleration in average revenue per active customer (ARPAC) which grew by 30% to $11.40. Additionally, revenues surged by 69%, coupled with a substantial expansion in net margins, reaching 16.2% compared to 11.3% in the previous quarter. These financial metrics demonstrate the company’s strong growth and effective cost management, as evidenced by the stable cost to serve. Moreover, Friedman sees potential in Nu Holdings’ strategic expansion into Mexico, a market with low card penetration, where the company has already achieved significant active customer growth.
Furthermore, Friedman’s endorsement is reinforced by Nu Holdings’ performance in personal loan originations, which saw an 88% increase in a foreign exchange-neutral basis. The company’s credit card interest-earning portfolio (IEP) also experienced a healthy boost, driven by the rising popularity of digital payment options such as PIX and Boletto financing. Although there was a slight increase in non-performing loans (NPLs) and cost of risk, these were attributed to aggressive growth strategies in new markets like Mexico and Colombia, which are considered manageable within the company’s overall growth trajectory. Consequently, based on these strong financial results and strategic initiatives, Friedman has raised the price target for Nu Holdings’ stock and reaffirms a Positive rating, suggesting confidence in the company’s continued success and investment potential.
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Nu Holdings (NU) Company Description:
Nu Holdings Ltd is engaged in providing digital banking services. It offers several financial services such as Credit cards, Personal Account, Investments, Personal Loans, Insurance, Mobile payments, Business Account, and Rewards.
