UPDATE: SMBC Nikko Securities Starts DLocal Limited (DLO) at Neutral
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SMBC Nikko Securities analyst Andrew Bauch initiates coverage on DLocal Limited (NASDAQ: DLO) with a Neutral rating and a price target of $32.00.
The analyst comments "
Though its direct and single API connection, dLocal enables premier enterprise merchants (AMZN, NFLX, UBER, MSFT, DIDI, and more) to reach online consumers through pay-in and pay-out capabilities in over 30 countries (and counting). Exiting the pandemic, the globalization of eCommerce has reached an inflection point, enabled in part by the rise of FinTech. As eCommerce growth in developed markets begins to slow, retailers are becoming increasingly motivated to seek out the fastest growing (and likely more aptly described esoteric) markets to deliver growth. That said, reaching customers in these markets comes with a web of regulatory, compliance, currency, cultural, and operational complexities. dLocal is optimally positioned to service this rapidly growing demand, evidenced by an annualized run rate TPV of nearly $6B (~2% of global cross-border eCommerce volume), and as of last quarter, growing >200% Y/Y. What remains to be seen is how long this outsized growth can be sustained, and whether the inevitable rise of competition in these markets will lead to higher than anticipated degradation of the Company’s premium yields (as of 3Q, DLO generated gross yields of 380bps and net yields of 190bps). While we believe dLocal’s first mover advantage and new sales momentum will translate to growth handily above peers for the next several years, we have less confidence in the trajectory of gross margins exiting this period and initiate Neutral on shares."
Shares of DLocal Limited closed at $26.57 yesterday.
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