The Street Bullish on Nu Holdings (NU) Despite more than 25% YTD Decline

​Nu Holdings Ltd. (NYSE:NU) has declined roughly 25% year-to-date, however, the Street sees more than 41% upside from the current levels. The stock recently gained back some of its losses after announcing a $1 billion share buyback program. Nu Holdings Ltd. (NYSE:NU) is also one of the Stocks Expected to Bounce Back According to Analysts.

​While 81% of the 21 analysts covering the stock maintain a Buy rating. Recently, on June 15, Citi downgraded the stock from Buy to Hold and lowered the price target from $18 to $13. Citi noted that Nubank’s growth is increasingly coming at a cost. This is because the company leans heavily on credit to drive expansion. Citi believes this will weigh on monetization and profitability.

​Moreover, the firm also flagged a more specific structural risk, noting that Nubank’s heavy exposure to credit cards and personal loans makes it particularly vulnerable to what the firm calls a “crowding-out effect.” This is a situation where borrowers become stretched across multiple obligations, impairing their ability to repay and thereby raising the risk of rising defaults and deteriorating credit quality.

Nu Holdings Ltd. (NYSE:NU) operates as a digital banking platform provider across the United States, Mexico, the Cayman Islands, Colombia, and Brazil. The company provides spending solutions, including Nubank+ Tier, Nu credit and prepaid card, Ultraviolet credit and prepaid card, mobile payment solutions, and Nu Shopping. It also offers transactional Solutions, and savings & investing solutions.

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