Analyst Tito Labarta from Goldman Sachs maintained a Buy rating on Nu Holdings (NU – Research Report) and keeping the price target at $15.00.
Tito Labarta has given his Buy rating due to a combination of factors surrounding Nu Holdings’ strategic financial maneuvers and market positioning. Labarta’s confidence stems from the company’s plans to expand its net interest margin (NIM) by leveraging its loan to deposit ratio, which could lead to higher profitability. Nu Holdings’ intention to intensify its lending operations in Mexico, after a period of assessing risk models and deposit growth, further bolsters the positive outlook. Additionally, the company’s focus on small and medium enterprise (SME) lending is seen as a significant future growth opportunity, reaffirming Labarta’s target price of $15 and maintaining a Buy recommendation.
Analyzing asset quality, Labarta observes the seasonal nature of the deterioration, attributing it to normal levels of provisions following a period of heightened recoveries. The increase in non-performing loans (NPL) ratio is largely attributed to typical first-quarter trends, with a minor portion resulting from recent credit expansion. Nu Holdings’ improvement in NPLs in Mexico, due to enhanced underwriting practices and a shift in customer demographics, also contributed to Labarta’s positive rating. The company’s strategic approach to maximizing net present value (NPV) across the credit cycle and maintaining a stable renegotiated loans level supports the optimism for its stock performance.
In another report released yesterday, Susquehanna also reiterated a Buy rating on the stock with a $14.00 price target.
NU’s price has also changed moderately for the past six months – from $8.830 to $11.550, which is a 30.80% increase.
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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.
