Nu Holdings (NU) Following Its US Launch Looks Undervalued To Bulls
Nu Holdings (NYSE:NU) has kicked off full operations in the United States through a partner bank, pairing high-yield deposit accounts with a no-fee credit card and launching its new multi-currency Nu Global platform.
Nu Holdings has rolled out these products into a stretch of choppy trading, with the share price down 7.93% over the past week and 6.31% over the last month, yet still up 8.65% on a 90-day share price return and sitting on a 3-year total shareholder return of 97%. This points to long-term momentum even as short-term sentiment cools following recent broker downgrades and concern about Brazil’s consumer backdrop.
Compare Nu Holdings' U.S. push with other digital finance players by scanning our hand-picked list of solid balance sheet and fundamentals (22 results) for potential ideas with sturdier foundations.
Recent weakness in Nu Holdings as it pushes into the U.S. leaves a fork in the road. Are investors reassessing the business, or has sentiment simply moved faster than the fundamentals and current valuation?
Most Popular Narrative: 39% Undervalued
Nu Holdings closed at $13.81, while the most followed valuation narrative, using a $22.74 fair value, frames the shares as materially discounted and heavily influenced by how investors see growth, credit risk, and U.S. expansion in relation to that gap.
The third is that the risk/reward profile is asymmetrically favorable for the patient investor. The risks are real, including exposure to the Brazilian real, an adverse credit cycle, and geographic concentration, but they are, to a large extent, already priced in. The optionality of a U.S. banking charter and the AI Private Banker initiative is not reflected in the current valuation. The consensus among 21 analysts, with 19 buy ratings and an average price target of $19.87, implies an upside potential of +63% from current levels.
See why 96 investors see Nu Holdings as 39% undervalued.
Result: Fair Value of $22.74 (UNDERVALUED)
Still, the narrative around Nu Holdings could unravel quickly if Brazil’s credit cycle worsens or if U.S. expansion delays undermine confidence in its global push.
Find out about the key risks to this Nu Holdings narrative.
Another View On Nu Holdings' Valuation
Nu Holdings screens as attractive on the SWS DCF model too, with the shares at $13.81 compared with an estimated future cash flow value of $16.75. That gap suggests the market is still pricing in plenty of execution and credit risk. The question is whether that discount narrows or widens from here.
For readers who want to see how this cash flow view is built line by line, Look into how the SWS DCF model arrives at its fair value.
Next Steps
If the mixed sentiment around Nu Holdings leaves you unsure, it may be useful to review the underlying data yourself and compare your assessment with the 4 key rewards and 2 important warning signs.
Looking for more Nu Holdings style opportunities?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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