Key Highlights

• UBS Upgrades to Buy: Analyst Kaio Prato upgraded DLocal to Buy from Neutral with a $20 price target, up from $16.

• Strong Growth Path With Operating Leverage: UBS sees improving operating leverage alongside a "strong growth path" as the primary investment thesis.

• Emerging Market Digitalization Cited: Rising global digitalization, lower e-commerce penetration in emerging markets, and geographic expansion support the growth case.

UBS analyst Kaio Prato upgraded DLocal (NASDAQ: DLO) to Buy from Neutral with a price target of $20, up from $16, citing a "strong growth path" with improving operating leverage and significant re-rating potential as market confidence builds following a series of solid quarterly results from the payments company.

The analyst told investors that DLocal's shares have re-rating potential given rising market confidence following consecutive quarters of improving fundamental performance, and described the current valuation as a "compelling multiple" at current share levels given the growth trajectory ahead.

UBS believes DLocal's growth will be supported by three structural tailwinds: rising global digitalization, lower e-commerce penetration in emerging markets relative to developed market peers, and ongoing expansion into new geographies that extend the company's addressable market beyond its existing footprint.

DLocal (NASDAQ: DLO) operates as a payment processing platform specifically focused on emerging markets, enabling businesses to accept and send payments across Latin America, Africa, and Asia, markets where e-commerce infrastructure development is still at an earlier stage than the US and Western Europe, creating a longer runway for growth.

The upgrade follows a period during which DLocal shares rebuilt credibility with institutional investors after earlier governance and operational concerns had weighed on sentiment. The series of solid quarterly results cited by UBS as the catalyst for improving market confidence suggests the company has successfully addressed prior investor skepticism about execution consistency.

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