Morgan Stanley sees Nubank reaching US$100 billion value by 2026

SHARES in Nu Holdings are set to more than double by the end of 2026, pushing its market value above US$100 billion as the digital bank backed by Warren Buffett’s Berkshire Hathaway expands across Latin America, according to Morgan Stanley.

Nubank, as the Brazilian online lender is known, could reach US$16 a share by the end of next year and US$20.9 by December 2026 as it offers more products to clients in its largest market – Brazil – and also grows in other countries, analysts led by Jorge Kuri wrote in a note dated Oct 18.

Shares in Nubank leaped as much as 5.2 per cent to US$8.11 on Thursday (Oct 19), giving it a market value of US$38 billion. Only one other company is currently valued above US$100 billion on the MSCI Emerging Markets Latin America Index – Brazil’s state-controlled oil giant Petrobras – while Brazil’s largest bank Itau Unibanco Holding is valued at US$49 billion.

“Nubank has a unique opportunity to win greater share of wallet among its clients in Brazil by cross-selling products that still show low penetration,” the analysts wrote, citing offerings including payroll-backed loans. Moreover, “management can successfully replicate its business model in Mexico and Colombia”.

Nubank posted an adjusted net income of US$262.7 million for the second quarter and finished the period with 83.7 million clients across Brazil, Mexico and Colombia. The stock still trades below its IPO price as some investors wonder if the company will deliver on the promised growth.

Earlier this week, Jefferies touted the bank as “one of the most significant disrupters globally” and flagged it could take advantage of a large group of people underserved by Mexican banks. In Brazil, the lender is already the primary bank for 27 per cent of Brazilians, up from 15 per cent in 2021, according to JPMorgan proprietary client survey. BLOOMBERG

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