Hold Rating Maintained for XP Amid Mixed Financial Signals and Strategic Shifts

XP (XP – Research Report), the Financial sector company, was revisited by a Wall Street analyst yesterday. Analyst Mario Pierry from Bank of America Securities maintained a Hold rating on the stock and has a $16.00 price target.

Mario Pierry has given his Hold rating due to a combination of factors related to XP’s financial performance and strategic outlook. The company’s net income expanded year-over-year, aligning with expectations, but the growth was tempered by higher than anticipated selling, general, and administrative expenses. While there was an acceleration in revenue growth, particularly driven by fixed income and banking products, this was offset by a decline in revenues from equities.
The expansion of the earnings before tax margin was noted, but it still falls below the company’s mid-term guidance, and a reduction in the BIS ratio suggests a potential shift toward a more capital-intensive strategy. Looking forward, XP’s revenue growth is expected to exceed 10% in 2025, contingent on diversification and cost discipline. However, given the limited upside to the price objective set at $16.00 and the current stock price of $15.02, the Hold rating reflects a cautious stance due to these mixed signals in performance and future outlook.

In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $18.00 price target.