Nu Holdings Q3 Earnings Ease Brazil Concerns, Boost Mexico, Colombia Growth

Shares of Nu Holdings Ltd. (NYSE:NU) are up Friday morning, after the company on Wednesday reported its third-quarter results.

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The strong quarterly results eased Brazil-related anxiety while the company gains momentum in other markets, according to Needham.

The Nu Holdings Analyst: Analyst Kyle Peterson reaffirmed a Buy rating and price target of $19.

The Nu Holdings Thesis: Both Mexico and Colombia exceeded 15% penetration, with credit and deposit products quickly gaining momentum, Peterson said in the note.

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He highlighted the following from Nu Holdings’ third-quarter print:

• Total revenue of $6.26 billion, beating consensus of $5.96 billion
• Net interest income of $3.87 billion, above the $3.72 billion estimate
• Fee income of $913 million, surpassing consensus of $779.5 million
• Risk-adjusted NIM (net interest margin) of 12% slightly missed expectations due to a one-time charge
• Earnings of 22 cents per share came in line with estimates.

The company’s results came against an uncertain backdrop due to the recent elections in Brazil, the analyst stated. Core credit NPL rates remaining stable helped drive the upside, he added.

Although management did not provide guidance, they revised the projection for the efficiency ratio for the year to 19%-19.5%, better than the prior guide of around 20%, Peterson said.

They expect the risk-adjusted NIM to remain healthy in the fourth quarter, the analyst added. "In addition, NU expects the effective tax rate to decline to a low- to mid-20s range starting in FY27," he further wrote.

Peterson further wrote that Nu Holdings remained "a high conviction name for investors looking for a global neobank."

NU Price Action: Shares of Nu Holdings had risen by 7.72% to $12.70 at the time of publication on Friday.

Photo: Courtesy Nu Holdings