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BofA raises dLocal shares target on stable TPV despite revenue challenges

EditorEmilio Ghigini
Published 08/15/2024, 07:36 AM
DLO
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On Thursday, BofA Securities updated its stance on DLocal Limited (NASDAQ:DLO) shares, a technology platform enabling global enterprise merchants to connect with billions of consumers in emerging markets. The firm raised its price target to $8.00, up from the previous $7.50, while maintaining a Neutral rating.

The price target adjustment follows DLocal's second-quarter earnings release, which slightly misses analysts' expectations. The company also revised its full-year 2024 guidance downward across several key performance indicators, with gross profit and adjusted EBITDA affected more significantly than total payment volume (TPV). Despite these adjustments, TPV was reported to remain relatively stable.

BofA Securities highlighted DLocal's challenges, including limited short-term revenue visibility due to market volatility in countries like Nigeria, Argentina, and Egypt.

However, the firm acknowledged DLocal's commitment to investing in its long-term growth. This includes efforts to enhance engineering capabilities, improve back-office functions, and expand the company's licensing portfolio.

The report noted that July's gross profit trends were marginally weaker compared to June, yet TPV continued to show strength. BofA Securities reiterated its Neutral rating, stating that while DLocal maintains a solid business model, the recent financial results support the firm's ongoing concerns regarding potential margin compression and a deceleration in revenue growth.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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