XP Will Benefit From 2026 Earnings Power And Capital Returns

We modestly lift our fair value estimate for XP to approximately $26, reflecting analysts’ higher year-end 2026-based price targets in the low $20s, even as they trim revenue growth assumptions and flag near-term macro and activity headwinds.

Analyst Commentary

Bullish analysts have nudged their price targets into the low $20s, aligning with our updated fair value framework and signaling growing confidence that XP can execute through a tougher macro backdrop. While revenue trajectories are being recalibrated to reflect weaker activity and high interest rates, earnings expectations have largely held steady, suggesting that margin discipline and cost control remain credible supports for the equity story.

Notably, the latest target hikes are primarily driven by rolling valuation models to year-end 2026, rather than by aggressive upward revisions to near term fundamentals. This shift underscores a longer term view that XP’s diversified platform and structurally higher profitability can sustain returns once cyclical headwinds ease. It also reinforces the idea that the current share price still embeds a meaningful risk discount relative to medium term earnings power.

Even as activity-sensitive lines face pressure, bullish analysts continue to emphasize XP’s resilient fee base and the potential for operating leverage as volumes normalize. They argue that a combination of stable earnings forecasts, conservative growth assumptions, and an extended valuation horizon creates a more favorable risk reward profile. This, in turn, supports the case for multiple expansion over time, provided XP can deliver consistent execution on client growth, product mix, and cost efficiency.

The tone of recent commentary remains constructive, though not euphoric, with investors encouraged to look beyond the next quarter or two of choppy results. The consensus among more optimistic voices is that near term volatility could offer entry points into a franchise that is positioned to benefit from cyclical recovery in capital markets activity and a gradual improvement in sentiment around Brazilian financials.

Bullish Takeaways

• Recent price target increases into the low $20s highlight a view among bullish analysts that XP’s 2026 earnings power is underappreciated by the market, supporting the case for upside to current valuations.
• Stable earnings forecasts, despite trimmed revenue growth assumptions, reinforce the view that XP’s business model and cost discipline can help protect profitability through the current macro slowdown.
• Rolling valuation frameworks to year-end 2026 effectively lengthens the investment horizon, allowing more time for operating leverage and normalized activity levels to be reflected in the share price.
• Bullish analysts characterize current macro and activity headwinds as cyclical rather than structural, framing any near term weakness as an opportunity to build exposure to XP’s long term growth story.

What's in the News

• XP Inc. announced a new share repurchase program of up to BRL 1,000 million in Class A common stock, to be funded with existing cash, with an expiration date of November 18, 2026 (company announcement).
• The Board of Directors authorized a new buyback plan on November 17, 2025, reinforcing management’s commitment to returning capital to shareholders (company announcement).
• From July 1, 2025 to October 20, 2025, XP repurchased 10,163,293 shares, or 1.93 percent of shares outstanding, for BRL 980.18 million, completing a previously announced BRL 1,000 million buyback totaling 10,395,960 shares, or 1.97 percent (company filing).
• The Board declared a cash dividend of USD 0.18 per Class A share, payable December 18, 2025 to shareholders of record on December 10, 2025, with the distribution expected to total about BRL 500 million at current exchange rates (company announcement).

Valuation Changes

• The Fair Value Estimate has risen slightly from approximately $25.41 to about $26.00 per share, reflecting a modestly higher long term earnings outlook.
• The Discount Rate has increased marginally from 12.32 percent to 12.50 percent, implying a slightly higher required return and risk premium.
• Revenue Growth has fallen slightly from about 17.1 percent to roughly 16.6 percent, incorporating more conservative top line assumptions.
• The Net Profit Margin has declined modestly from around 27.6 percent to about 26.7 percent, indicating slightly lower expected profitability.
• The Future P/E has edged down from approximately 13.7x to about 13.5x, suggesting a marginally lower valuation multiple on projected earnings.