HSBC has initiated analyst coverage on PicPay (NASDAQ:PICS), assigning a Buy rating and setting a price target of $21.00, according to a report released Wednesday. At the time of the report, PicPay shares were trading at $15.48. HSBC’s valuation implies about 59% upside from that level.
The bank reached its target using a dividend discount-model framework, applying a cost of equity of 15% alongside an assumed growth rate of 8.0%. That approach underpins the firm’s optimistic assessment despite prescribing conservative capital costs for the fintech.
HSBC’s bullish view is consistent with PicPay’s recent top-line performance: the company recorded 91.7% revenue growth over the last twelve months. InvestingPro’s metrics cited in the report also show the company’s financial-health score as "GOOD," underscoring a solid balance-sheet position by those measures.
From a liquidity perspective, PicPay reported a current ratio of 3.96, indicating that its liquid assets substantially exceed short-term liabilities. HSBC highlights this as a potential buffer that could help the company absorb short-term market stress.
Still, HSBC singled out underwriting as the principal risk factor. The report notes that PicPay’s underwriting capabilities will be scrutinized if an asset-quality downcycle occurs. In the absence of such a deterioration in credit conditions, HSBC expects PicPay to deliver strong near-term earnings momentum.
To illustrate the range of outcomes, the firm provided bull and bear scenario analyses as part of its initiation. HSBC also observed that a general shift toward risk-off sentiment in markets could have a proportionally larger negative effect on PicPay than on some peers, specifically referencing Nu as a comparator.
HSBC analyst Neha Agarwala characterized certain uncertainties tied to the company as "known-unknowns," and indicated that these appear to be reflected in the stock’s current pricing.
Overall, HSBC’s initiation frames PicPay as a fast-growing digital-payments platform with strong near-term growth indicators and a conservative valuation method supporting a materially higher price target, while also calling attention to credit and market-sentiment risks that could temper that outlook.