Citi initiated coverage of PicPay shares with a buy recommendation and a price target of $28 by the end of 2026, representing a potential upside of 78.23% from the last closing price.
Newly listed on Nasdaq, PicPay shares debuted on the American stock exchange at the end of January, priced at US$19 each. After only a few weeks of trading, the stock closed last week at US$15.71, with the company valued at approximately US$2.1 billion. The shares rose about 3% on Monday morning, February 23rd.
The company's growth was based on transaction fees, such as Pix payments using third-party credit cards. In 2024, its total payment volume was R$ 421 billion, and it is expected to have reached R$ 558 billion by the end of 2025. Now, the expectation is that this growth will come from its own origination.
Citi's central thesis revolves around the company's credit portfolio, which is still small, but which, according to analysts, should experience rapid growth in the coming years. The estimate is that the portfolio will increase from R$ 21.5 billion in 2025 to R$ 50.5 billion by 2027.
The strategy involves a balanced mix of secured credit (such as public and private payroll loans) and unsecured credit (credit cards and personal loans), in addition to expanding the offering to the current customer base, which totals more than 66 million accounts.
In the credit segment, Citi sees PicPay following the same path that propelled Nubank 's business, which takes customers from very secure products with low limits to credit with high limits and greater profitability.
Analysts project average annual profit growth of 35% between 2025 and 2030, driven by portfolio expansion, increased revenue per customer, and efficiency gains.
Without a physical branch network and with the platform already structured, the bank believes that expense growth will be well below revenue growth, allowing for strong operational leverage – which could cause the return on equity (ROE) to jump from 17% in 2024 to 31% in 2027, according to analysts.
Nubank and Inter are PicPay's main peers, according to Citi's assessment. However, according to the bank's calculations, PicPay is trading at a 5% discount compared to Nubank and a 47% discount compared to Inter, considering the assumptions for 2026.
According to Citi, one of PicPay's distinguishing features is its continued presence in Brazil, while internationalization plans are expected to put pressure on the expenses of Inter and Nubank.
PicPay currently has 66 million customers, of which 42 million are active. Citi expects these numbers to continue growing, but at a slower pace. Even so, analysts expect the company to continue attracting customers from incumbent banks to its customer base.
PicPay's growth is occurring in a highly competitive environment, with strong rivalry from Nubank, Inter, PagBank, C6 Bank, and established institutions like Itaú, Bradesco, and Santander Brasil. This leads to margin concessions, higher marketing costs, and choices related to growth.
