This Latin American payments stock is 'turning the corner' and could rally 28%, HSBC says

CNBC

a day ago

Latin American online payments provider dLocal is finally on a path towards long-term growth, according to HSBC. Analyst Neha Agarwala upgraded shares to buy from hold and lifted her price target by $3.50 to $15, suggesting the stock can gain more than 28% over the next year. DLocal, up 51% in the last year and another 20% in early trading Thursday after posting second-quarter results Wednesday, has been widening its global expansion. In January, for example, the Uruguayan company secured a U.K. payment institution license . HSBC sees it benefiting from a lower cost of equity and more operating leverage in 2026. "We upgrade our rating on the stock from Hold to Buy in view of the significant long-term growth potential for the company along with tangible momentum witnessed in the past few quarters; [DLocal] we believe is on the right path to gradually regain market confidence," Agarwala said in a note to clients, adding that the company is "showing clear signs of turning the corner." DLO 1Y mountain dLocal stock performance over the past year. Agarwala's bullish thesis comes from DLocal's low earnings volatility and improving disclosures over the past year. The company's significant earnings beat and continued strong volumes also improved sentiment. "Beyond this consistent performance, which we believe is key for regaining market confidence, what excited us is better than expected cost control despite continued investments in personnel and technology, introduction of new innovative products which will likely not bring material revenues in the near term but enhances its offering versus competition in an industry which is fairly commoditized, and capital optimization," Agarwala wrote in the note. DLocal went public on the Nasdaq in 2021 and garnered a $9 billion valuation at the time, but has since declined in value. The company now has a roughly $3.3 billion market capitalization.