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Nu Holdings results top consensus but fail to impress buy-side investors

Published Nov 15, 2023 23:24
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Brazilian online lender Nu Holdings (NU) declined after it reported results for the third quarter. Overall, the financial services platforms’ performance was solid, but buy-side expectations were elevated heading into the print, leading to a negative reaction in the stock.

Nu Holding reported third quarter net income of $303 million, beating the consensus for $251 million. Nu posted $2.1 billion in revenues, a new all-time record high, compared to the estimate of $2 billion.

Commenting on the quarter, analysts at Morgan Stanley said, “Nubank delivered another solid quarter, beating sell-side net income (GAAP) consensus by 20%. Top line growth remains very robust driven by solid client net adds, volume growth, and NIM expansion … While Nubank's net income (GAAP) surpassed sell-side expectations by 20%, we think the buy-side consensus was higher, closer to US$300 million, and exactly in line with the reported figure. Given the recurring outsized earnings beats over the last two years, this quarter's seemingly ‘in-line’ results may limit the market's enthusiasm tomorrow -- we would be buyers on weakness.”

Analysts at Citi also commented on the stock, saying, “Overall, strong results, continuing to gain share in credit cards and personal loans, while improving profitability. However, we believe that the current rich valuation already embeds high expectations, which will demand strong success in new growth avenues (like payroll and Mexico) to compensate for the eventual deceleration of credit card and personal loans, justifying our Neutral rating on the name.”

NU Holding declined 10% after its results were published. Shares are still up 100% year-to-date.

Nu Holdings results top consensus but fail to impress buy-side investors
 

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