Nu Holdings Stock Plunged After Lula Win: UBS and JPMorgan See Opportunity

Nu Holdings (NYSE:NU) stock has sold off and is hovering near its lowest level since June, a trend that continued after the recent Brazilian elections. It dropped to $11.61, about 39% below its all-time high, with its market capitalization falling from $91 billion to $56 billion. Still, some analysts, including those at UBS and JPMorgan, have maintained a bullish outlook.

JPMorgan and UBS Have Maintained a Bullish Outlook for Nu Holdings

Nu Holdings stock dropped sharply after Luiz Inácio Lula da Silva won the closely watched election against Flavio Bolsonaro. The retreat coincided with a broader sell-off in Brazilian companies, with the benchmark Ibovespa Index falling to 167,921, its lowest level since August 21 and 20% below its October high. The iShares MSCI Brazil ETF (AMEX:EWZ) fell to $32 from its October high of $44.

Nu Holdings also dropped after reports emerged that it was in talks to acquire Monzo, a British neobank. In an SEC filing, Nubank confirmed that the talks were happening, but that the two companies had disagreed on the price. 

Still, despite these challenges, analysts have maintained a bullish outlook for the stock. Benzinga data shows that the average target for the stock is $18.25, up by 57% from the current level. Thiago Batista, a UBS analyst, hiked his target to $20.50 from the previous $18.20, while JPMorgan raised its target from $20 to $23.

These analysts have pointed to the company’s user and revenue growth and the fact that its profits are rising. Also, the company is expanding its business in the United States, where it has received a conditional bank charter. The bank plans to have hubs in places like Miami, San Francisco, Northern Virginia, and North Carolina. 

Nubank’s Business is Growing at a Strong Pace

Nu Holdings’ business has been in a strong growth trajectory as it became the biggest digital bank in Latin America. Its annual revenue has jumped from $1.7 billion in 2021 to $15 billion last year. 

Benzinga data shows that analysts expect its annual revenue to hit $22 billion this year and $28.27 billion next year. Its most recent results showed that its revenue jumped to $5.9 billion in Q2 from $3.8 billion in the same period last year.

In addition to dominating Brazil, it has now become the biggest neobank in Mexico with over 16 million customers, 16.5% of its adult population. This means that it has more room to grow in the country over time. 

The next important driver for the stock is its earnings, which will come out on November 12. Estimates are that its revenue rose by 43% in the third quarter to $5.98 billion, with its earnings per share rising to 22 cents. 

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