DLocal: Strong Growth Amidst Market Challenges Justifies Hold Rating

Analyst Jorge Kuri of Morgan Stanley maintained a Hold rating on DLocal (DLO – Research Report), boosting the price target to $11.00.

Jorge Kuri’s rating is based on a combination of positive and negative factors affecting DLocal’s performance. On the positive side, the company reported strong net income and operating results, with significant growth in total payment volume (TPV), revenue, and gross profit, all exceeding expectations. The announcement of a one-time dividend and a new annual dividend policy also adds to the positive sentiment.
However, there are concerns that justify the Hold rating. DLocal experienced a loss of volumes with a large merchant in Mexico, and its business in Brazil is facing pressure. Additionally, the gross profit take rate contracted sequentially, which could impact future profitability. These mixed results suggest that while the company shows potential, there are underlying challenges that warrant a cautious approach, leading to the Hold recommendation.

In another report released on May 1, Barclays also maintained a Hold rating on the stock with a $9.00 price target.