DLocal Shares Surge 22% Following HSBC Upgrade and Q2 Results

DLocal (DLO) shares rose 22% after HSBC upgraded its outlook following Q2 earnings, citing strong cost management and innovative products. Analysts set an average price target of $13.14, a slight downside from current levels. GuruFocus estimates a significant upside potential with a GF Value of $32.66.

DLocal (DLO), a leading fintech company based in Uruguay, saw its stock jump by over 22% after investment firm HSBC upgraded the stock from Hold to Buy. This upgrade came on the heels of DLocal's strong second-quarter earnings report, which exceeded expectations despite some one-time factors [1][2].

HSBC analysts, led by Neha Agarwala, highlighted several key factors contributing to the upgrade. These include DLocal's ability to control costs while investing in new staff and technology, as well as the launch of innovative products that differentiate it in a crowded and commoditized market [1][2]. Additionally, the company demonstrated strong payment volumes and better capital efficiency, further boosting HSBC's optimism about DLocal's long-term growth potential.

In response to the upgrade, HSBC raised its earnings forecasts for DLocal. The bank now expects DLocal’s earnings per share in 2025-2027 to be 6% to 9% higher than previously estimated, while net income projections for the same period are expected to be 4% to 9% higher [1][2]. Furthermore, HSBC increased its 2025 gross profit estimate to $396 million, slightly above the middle of the company’s updated guidance.

Wall Street analysts have a Moderate Buy consensus rating on DLocal stock, with three Buys, five Holds, and zero Sells assigned in the past three months. The average DLocal price target of $12.80 per share implies a 16.5% downside risk [1]. GuruFocus estimates a significant upside potential with a GF Value of $32.66, indicating substantial room for growth [3].

Despite the positive outlook, investors should exercise caution. The stock has risen significantly in recent months, and the current valuation may reflect some of the optimism. Additionally, DLocal operates in a competitive fintech landscape, and its ability to maintain its growth trajectory will depend on its ability to innovate and adapt to market changes.

References:
[1] https://www.tipranks.com/news/dlocal-stock-dlo-jumps-31-after-hsbc-upgrade
[2] https://seekingalpha.com/news/4485471-dlocal-jumps-22-after-hsbc-upgrades-to-buy-on-q2-ebit-beat
[3] https://www.gurufocus.com/stock/DLO