Key Takeaways
- XP shares fell 10% in a week as Citi, Morgan Stanley and Santander all downgraded the stock after Lula’s surprise re-election in Brazil.
- All three now rate XP neutral, with price targets of $15 to $19.
- XP trades at 6.5x forward earnings, its lowest in five years and about half its five-year average.
- The stock looks cheap, but the third-quarter report should show whether client flows held up after the election.
XP (XP) stock is down 10% in the past week, as three banks gave up on their bullish calls in three days.
Citi cut XP to Neutral from Buy on Tuesday, Oct. 27, and slashed its price target to $15 from $25 as it reset its ratings on Brazilian financials. Then, before Thursday’s open, Morgan Stanley cut the stock to Equal Weight from Overweight, lowering its target to $19 from $23, and Santander cut it to Neutral from Outperform with a $19 target.
Brazil hasn’t stopped selling
The downgrades came on the heels of XP’s crash on Monday, Oct. 26, when it lost about half its value after Luiz Inácio Lula da Silva won Brazil’s presidential runoff with 51.8% of the vote. Markets had bet on a Bolsonaro win.
The selling kept up all week. On Friday, with no XP news, the Ibovespa fell 0.8% for its fifth straight loss, and the real weakened to R$5.44 per dollar.
XP is exposed to both. Morgan Stanley pointed to equity flows and trading volumes after the election. And XP reports in reais, so a weaker real makes the same earnings worth fewer dollars to holders of its US-listed shares.
TIKR tracks 13 analysts on XP. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on XP, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See XP’s Analyst Ratings
From $33 to $15 in a week
Just before the vote, analysts were moving the other way. On Oct. 20, BofA raised its target to $33 from $21, keeping a Neutral rating, after the stock had doubled from its August lows.
Now Citi’s $15 is barely above Monday’s close, and Morgan Stanley’s and Santander’s $19 targets are about 35% above it.
Analysts expect XP’s normalized EPS to grow 11% in 2026 and about 40% from 2025 to 2028:
Cheap, but I’d wait for the report
The selloff leaves XP at 6.5x forward earnings as of Monday’s close, its lowest in five years and about half its five-year average of 13x:
XP’s third-quarter report, due in the coming weeks, is the next test. The quarter ended Sept. 30, before the vote, so what I’ll watch for is what management says about client flows and trading volumes since Lula won.
Here’s where I land: XP looks cheap, but at 6.5x, investors are pricing in lower estimates, and three banks just sided with them. I’d wait for that call before buying. Of course, if clients kept investing through the election, today’s price could look like a bargain.
So what is XP stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
