This investor loves Nubank
Murray Wealth Group senior portfolio manager Michael Hakes is bullish on NU Holdings (NU Holdings Stock Quote, Chart, News, Analysts, Financials NYSE:NU), commonly known as Nubank, citing its scale, cost advantage and long runway for growth across Latin America.
Speaking on BNN Bloomberg’s Market Call on Feb. 18, Hakes described the Brazil-based company as “one of the largest digital banking platforms and leader in the Latin American fintech space,” noting it has grown from a single no-fee credit card product launched in 2013 to a full-service financial platform with more than 127 million customers.
“They’ve added products such as free digital checking and savings accounts for both individuals and businesses, personal loans, payroll loans, buy now pay later products, life insurance through a partnership with Chubb, and international remittances,” Hakes said. “They are now spreading out through Latin America — Mexico and Colombia — and expanding into travel as well.”
He added that the company recently received conditional approval in January for a U.S. national bank charter, which he views as another step in its expansion strategy.
Hakes said Nubank’s key competitive advantage is its digital-only model.
“A digital bank doesn’t have any physical branches, and this allows a cost structure advantage that traditional incumbents just struggle to match,” he said. “The monthly active customer cost to serve is about $0.90. That’s significantly lower than traditional banks, which can cost more than $10 to $20 per month to serve.”
He also highlighted Nubank’s use of proprietary data and credit underwriting to lend to previously underserved populations while maintaining controlled delinquency rates.
Looking ahead, Hakes expects revenue to grow at approximately 20%, with earnings per share expanding in the 25% to 30% range due to operating leverage.
“We think the stock will grow at similar rates over the long term,” he said.
Of the analysts covering the shares, 16 rate the stock “Buy,” three “Hold,” and one “Sell,” with a consensus price target of US$19.25.
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Rod Weatherbie
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Rod Weatherbie is a journalist based in Prince Edward Island. Since 2004, he has written extensively about the Canadian property and casualty insurance landscape. He was also a founder and contributing editor for a Toronto-based arts website and a PEI-based food magazine. His fiction and poetry have been featured in The Fiddlehead, The Antigonish Review, and Juniper.