BofA Securities has initiated coverage of PicPay (NASDAQ:PICS) with a buy rating and placed a $27.00 price target on the Brazilian fintech, according to a report published Monday. The brokerage sees approximately 73% upside from the stock's current quoted level.
PicPay, identified as the third-largest fintech in Brazil by number of clients, began in 2012 as a digital wallet that consolidated cards and accounts from third-party financial institutions. In 2023 the company altered its business model to assume balance-sheet risk, moving into underwriting credit cards and payroll loans.
BofA highlighted the newly expanded credit business as the anticipated principal driver of PicPay's future earnings. The firm projects a compound annual growth rate in earnings per share of 117% through 2028 and expects return on equity to climb above 30% over time. BofA noted that PicPay's current return on equity stands at 16% on a last-twelve-months basis, which the analyst team views as compatible with their 30%+ ROE objective.
At the time of the report, shares were trading at $15.61, giving the company a market capitalization of about $2.02 billion. InvestingPro analysis cited in the report describes the stock as appearing undervalued and points to additional Fair Value estimates and more than 10 ProTips available to PICS subscribers.
The brokerage's view that ROE and earnings growth will accelerate does not, in BofA's assessment, appear to be reflected in the current share price. That bullish stance aligns with Wall Street consensus ratings that the report described as Strong Buy. The company has also demonstrated rapid top-line growth, with revenue up 92% over the last twelve months as reported in the coverage summary.
Other investment firms have recently opened coverage on PicPay with positive assessments. Mizuho initiated coverage with an outperform rating and a $30.00 price target. RBC Capital began coverage with an outperform rating and projected a 53% compound annual revenue growth rate through fiscal 2027, assigning a $20.00 price target. HSBC also initiated coverage, assigning a buy rating and a $21.00 price target; HSBC's analysis used a dividend discount model with a cost of equity of 15% and a growth rate of 8.0%.
These analyst entries collectively underline a broadly favorable view among sell-side firms about PicPay's growth prospects and market position as it transitions from a digital-wallet platform into a credit-originating fintech.
Note on scope: The details in this piece are drawn from the coverage reports cited and reflect the analysts' published projections and ratings.