This article first appeared on GuruFocus .
Itau BBA downgraded Nu Holdings Ltd. ( NYSE:NU ) from Outperform to Market Perform and cut its price target to $18 from $20, citing increased medium-term uncertainty in Brazil's consumer environment. Nu Holdings shares were down 3.14% intraday.
Reduced fiscal stimulus and inflationary pressure from higher oil and commodity prices could weigh on Nu's core Brazilian business in coming quarters, according to the firm. It also points to Brazil's central bank becoming more vocal about possible macroprudential measures, which would tighten credit conditions and constrain the lending growth central to Nu's expansion.
The same pressures apply across Brazilian banking, including at Itau Unibanco and Banco Bradesco. Itau BBA is the investment banking arm of Itau Unibanco, one of Nu's largest competitors in Brazilian retail banking.
