On Friday, HSBC revised its price target for DLocal Limited (NASDAQ:DLO) shares, a cross-border payment platform, reducing it to $17 from the previous $19, while maintaining a Hold rating on the stock. The adjustment is attributed to the anticipation of a transitional year for the company as it positions itself for future growth.
The firm acknowledged the substantial long-term growth potential of DLocal, noting the company's efforts to expand its reach. However, HSBC pointed out that 2024 is expected to be a year of transition, with the new management team focusing on preparing the platform to scale up operations.
This strategic shift is anticipated to introduce some volatility in the company's earnings in the near term, particularly due to its exposure to certain fluctuating markets.
HSBC has adjusted its stance based on DLocal's financial guidance, opting to stay near the midpoint. The revisions also take into account a projected increase in the tax rate. Consequently, HSBC has lowered its net income estimates for DLocal for the fiscal years 2024 and 2025 by 23% and 19%, respectively.
DLocal's strategic transition and the recalibration of its financial outlook by HSBC are likely to be closely watched by investors as they assess the company's capacity to navigate the evolving market conditions and capitalize on its long-term growth opportunities.
InvestingPro Insights
DLocal Limited (NASDAQ:DLO) has been the subject of recent scrutiny by investors and analysts alike. According to real-time data from InvestingPro, DLocal boasts a market capitalization of $4.69 billion and is trading at a P/E ratio of 31.63. Notably, the company's revenue growth has been impressive, with a 55.24% increase over the last twelve months as of Q4 2023. This growth is further underscored by a healthy gross profit margin of 42.57% and an operating income margin of 27.88% for the same period.
From an investment perspective, two InvestingPro Tips stand out. Firstly, DLocal's management has been actively buying back shares, which can be a positive signal about the company's confidence in its value. Secondly, analysts predict that the company will be profitable this year, a sentiment supported by the company's strong return on assets of 15.6% over the last twelve months as of Q4 2023. Despite some analysts revising their earnings downwards for the upcoming period, DLocal's significant return over the last week of 10.48% indicates market optimism.
For those looking to delve deeper into DLocal's financial health and investment potential, there are additional InvestingPro Tips available. With a coupon code PRONEWS24, investors can receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a comprehensive set of insights and analytics on companies like DLocal. As of now, there are 9 additional tips listed on InvestingPro for DLocal, which could further inform investment decisions.
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