What Happened?
Shares of digital banking platform Nubank (NYSE: NU) jumped 3% in the afternoon session after the company received a price target increase from BofA Securities, which cited improving profitability trends.
BofA Securities increased its price target on the digital banking company to $16 from $14, while maintaining a Neutral rating. The firm noted that investors were encouraged by Nu's recent second-quarter results, specifically pointing to an expansion in its net interest margin, which suggests improving profitability after three quarters of decline. Analysts also highlighted positive asset quality trends, which could pave the way for stronger loan growth in the future. The positive sentiment builds on a recent upgrade from Citi, which on August 19 raised its rating on the stock from Sell to Buy and doubled its price target to $18, citing a string of strong quarterly performances despite macroeconomic headwinds.
The shares closed the day at $14.23, up 2% from previous close.
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What Is The Market Telling Us
Nubank’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 3.7% after it received a rare double upgrade from Citi, which significantly boosted its rating on the stock. The firm issued a rare double upgrade, shifting its rating on the stock from “Sell” all the way to “Buy” and doubling its price target to $18 from $9. This dramatic shift in perspective follows Nu Holdings' strong second-quarter performance, which showed robust profit and revenue growth. Citi cited the potential for an earnings boost as a key reason for the change.
Nubank is up 33.9% since the beginning of the year, but at $14.23 per share, it is still trading 10.4% below its 52-week high of $15.89 from November 2024. Investors who bought $1,000 worth of Nubank’s shares at the IPO in December 2021 would now be looking at an investment worth $1,378.
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