Nu Holdings (NYSE:NU) Valuation in Focus After Citi's Buy Reaffirmation and Mexico Growth Momentum

Nu Holdings (NYSE:NU) is back in the investment spotlight after Citi reaffirmed its Buy rating, highlighting growing optimism around the company's rapid expansion in Mexico. Since entering that market in late 2022, Nu Holdings has quickly attracted deposits and credit demand, mirroring the strategy that brought them success in Brazil. Add in fresh analyst estimates calling for robust earnings and revenue growth, and it is no wonder investors are watching closely.

This renewed attention is playing out in the stock’s momentum. Over the past month, Nu Holdings has outpaced the S&P 500 and its finance sector peers, riding a wave of positive sentiment that includes not only analyst confidence but also increased options activity and surging online search interest. Short-term gains have been particularly strong, pushing the year’s return higher, while its three-year total return stands out among industry leaders.

With all this excitement and growth, the real question is whether Nu Holdings is still undervalued, or if the current price already reflects those future gains.

Most Popular Narrative: 4.8% Undervalued

The most widely followed narrative suggests that Nu Holdings is modestly undervalued, with a fair value just above its current price based on robust future growth assumptions and industry trends.

The rapid growth of Latin America's digitally native population, combined with expanding smartphone and internet adoption, is creating a sustained surge in demand for Nu's app-based financial services. This is fueling long-term customer acquisition, higher engagement, and driving topline revenue growth.

What is the real engine behind this valuation? Discover the surprising bet on explosive digital banking growth, bold new product launches, and ambitious international plans. The analysts have built a case that puts the company’s long-term profitability, margin shifts, and a future multiple more typical of tech giants in the spotlight. Ready to dig deeper into the numbers and see what’s driving these high expectations?

Result: Fair Value of $16.99 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intensifying competition and rising credit risks could challenge Nu Holdings' ambitious growth narrative. These factors may potentially impact future earnings and valuation assumptions.

Find out about the key risks to this Nu Holdings narrative.

Another View: Putting Valuation Into Context

Looking at things through another lens, our DCF model paints a more cautious picture and suggests Nu Holdings might not be as cheap as it first appears. Which approach better captures the reality for investors?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Nu Holdings to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Nu Holdings Narrative

If you think there’s more to the story or want to see how the numbers stack up your way, it only takes minutes to build your own take. Do it your way

A great starting point for your Nu Holdings research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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