Nubank sees global crisis as ‘ideal time’ for acquisitions
- June 23, 2022
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O Nubank (NUBR33) considers the current moment of the economy as “ideal” to make acquisitions, and expects to do good deals at lower prices.
The context is of high interest rates and record inflation in the US, in addition to a double-digit IPCA in Brazil – which has even made analysts worsen their expectations for Nubank shareswhich have dropped nearly 70% in stocks since their debut, given credit risk.
In addition, startups have carried out mass layoffs in recent weeks, showing a worsening of the financial health of these companies.
However, David Velez, Nubank CEOremains optimistic and sees possible purchases at lower prices.
“Some of the merger and acquisitions we had 12 months ago are coming back with a 70% discount. . . We will look to do more mergers and acquisitions,” the executive said in an interview with the Financial Times.
Precisely because of this turbulent scenario, Vélez sees an improvement in the scenario for the digital bank, targeting resilience in the future with new purchases. “This will allow the fittest to survive,” Vélez said.
The thesis is that, with the Nubank acquisitionsthe company has a greater consolidation in the segment, given the high competitiveness of the sector.
Vélez said the growth of fintechs “has probably been too much” in recent years, and that should result in a cluster.
“Consumers will not have 20 different payment apps on their smartphones. It’s very complex. You can have three or four, not 20.”
Analyzing Nubank, BBA sees ‘storm’ ahead
In a recent opinion, Itaú BBA analysts worsened their expectations for Nubank’s shares listed on the NYSE. Now, the target price is $4.50, up from $3.47 at the current quote.
The house projects that “a storm must come ahead” for the company, chanting the thesis of credit riskcited by other banks and brokers.
Even though BBA’s target price has been above Nubank’s share price currently, analysts continue with a sell recommendation for the shares, under the label of ‘underperform’.
“Despite the current price of actions be more attractive, we recommend that investors stay away. Earnings momentum is likely to remain negative.”
Analysts see the valuation as unjustifiable and cite very high volatility and unattractive multiples. Projections are that the shares will be traded at 4x the company’s book value (P/VP) and 26x profit in 2023.
“They’re bringing in more interest income, in fact, but they’re also creating a cloudy environment about medium-term credit risk, in our view. Therefore, we believe that the default rates of the Nubank grew rapidly and that the company may soon have to slow the growth of the loan portfolio,” the report says.