Last Update 07 Feb 26

Fair value Increased 5.60%

XP: Future Shareholder Returns Will Rely On Buybacks And Cash Dividends

Analysts have nudged their fair value estimate for XP from US$22.63 to about US$23.89 per share, reflecting updated assumptions for revenue growth, profit margins and future P/E multiples informed by recent research that maintains a positive view on the stock.

Analyst Commentary

Bullish Takeaways

Bullish analysts view the recent initiation and refreshed fair value work as support that XP's current share price still leaves room for the updated US$23.89 estimate to be realized over time, assuming the company can deliver on its revenue and margin assumptions.
They highlight XP's ability to execute on its business model as a key support for the revised valuation, with the updated assumptions folding in expectations around earnings quality and the sustainability of current profitability levels.
The use of future P/E multiples in the fair value work signals confidence that XP can maintain a profile that justifies those multiples, provided it continues to meet growth and return targets embedded in the models.
Bullish analysts see the recalibrated fair value as a structured way to reflect recent research and checks, which they view as broadly supportive of XP's long term positioning in its core markets.

Bearish Takeaways

More cautious analysts point out that the updated fair value still relies on specific assumptions around revenue growth and margins, and any shortfall against those inputs could leave the US$23.89 estimate looking optimistic.
They flag that the valuation depends on future P/E multiples that may not hold if XP's earnings profile or risk perception changes, which could pressure the implied upside to the current fair value.
Some highlight that recent research maintaining a positive view does not remove execution risk, especially if XP faces higher costs or slower client activity than modeled.
Bearish analysts also caution that fair value updates built on relatively fine tuning of assumptions can be sensitive to small changes in growth, profitability, or discount rate inputs, which may add volatility to target outcomes.

What's in the News

XP completed a share repurchase under its existing buyback program, buying 10,395,960 shares, or 1.97% of its share base, for a total of BRL 1,000 million. This includes 10,163,293 shares repurchased between July 1, 2025 and October 20, 2025 for BRL 980.18 million (Key Developments).
The Board of Directors authorized a new buyback plan on November 17, 2025, giving XP approval to continue repurchasing shares, subject to the parameters of the plan (Key Developments).
XP announced a fresh share repurchase program of up to BRL 1,000 million in Class A common stock, funded with existing cash, with the program set to run until November 18, 2026 (Key Developments).
The Board declared a cash dividend of US$0.18 per Class A common share, payable on December 18, 2025 to shareholders of record on December 10, 2025. The total distribution is expected to be about BRL 500 million at current exchange rates (Key Developments).

Valuation Changes

Fair Value: revised from US$22.63 to US$23.89 per share, representing a modest upward adjustment in the target level.
Discount Rate: adjusted slightly from 12.5% to 12.33%, indicating a marginally lower required return in the model.
Revenue Growth: moved from 12.39% to 15.25%, reflecting higher modeled top line expansion.
Net Profit Margin: reduced from 28.11% to 26.22%, indicating slightly lower expected profitability on each unit of revenue.
Future P/E: tweaked from 12.39x to 12.58x, indicating a small change in the earnings multiple applied in the valuation work.

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Key Takeaways

Expansion of Brazil's middle class and tech-driven client migration are expected to drive XP's market growth, client acquisition, and long-term revenue gains.
Diversified products, platform innovation, and regulatory tailwinds should improve operational leverage, encourage cross-selling, and boost profitability.
Mounting competition, structural fee compression, rising costs, negative net new money trends, and regulatory risks threaten XP's growth, profitability, and ability to sustain margins.

Catalysts

About XP

Provides financial products and services in Brazil.What are the underlying business or industry changes driving this perspective?

The ongoing expansion of Brazil's middle class and gradual increase in personal savings rates are set to grow XP's addressable market, supporting long-term AUM and retail client growth-which should bolster revenue and earnings power as the company penetrates deeper into emerging segments.
The rapid client migration away from traditional banking to digital and tech-first investment platforms remains underappreciated, with XP's multi-channel ecosystem (IFA, internal advisers, RIAs) poised to capture significant share; this channel diversification and platform stickiness are likely to accelerate net new money inflows and drive sustained revenue growth.
XP's continued diversification of its product suite-including early-stage growth in insurance, retirement, cards, FX, global investments, and the newly launched consortium business-enables deeper client cross-sell and higher revenue per customer, pointing to meaningful top-line expansion and improved earnings resiliency.
Investment in scalable, technology-driven platforms and efficiency enhancements has produced steady improvements in operational leverage and expanding net margins; as XP grows, further margin gains are likely due to disciplined cost structures and self-reinforcing profitability trends.
Regulatory tailwinds in Brazil's capital markets, including reforms that increase transparency and investor protection, are likely to increase retail participation and support the overall volume of investable assets, providing a sustained catalyst for higher assets under custody and future revenue growth.

XP Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming XP's revenue will grow by 14.5% annually over the next 3 years.
Analysts assume that profit margins will shrink from 29.3% today to 27.0% in 3 years time.
Analysts expect earnings to reach R$6.8 billion (and earnings per share of R$12.3) by about September 2028, up from R$4.9 billion today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.0x on those 2028 earnings, up from 10.4x today. This future PE is lower than the current PE for the US Capital Markets industry at 26.3x.
Analysts expect the number of shares outstanding to decline by 1.9% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

XP Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Intensifying competition from large incumbent banks and fintech startups, especially in corporate and SME segments, is pressuring XP's fee structures and impacting corporate net new money inflows, which could constrain revenue growth and net margin sustainability.
Structural shift toward fee-based advisory models-currently only 5% of client assets but expected to rise in Brazil-tends to lower take rates; unless offset by larger share-of-wallet, this could gradually depress average revenue per client and operating margins.
Negative trends in net new money from corporate and institutional clients-driven by macroeconomic liquidity constraints and bank competitors demanding investment reciprocity for credit lines-signal ongoing challenges in capturing and retaining large client assets, impacting AUM/AUA growth and associated fee income.
XP's high and rising investments in marketing, technology, and sales force expansion (highlighted by significant increases in non-people SG&A) elevate operating expenses, which, if not matched by robust revenue acceleration, threaten future profitability and efficiency ratios.
Potential regulatory and tax changes-such as anticipated new rules affecting tax-exempt fixed income instruments and offshore fund taxation-could alter market dynamics, reduce product attractiveness, and slow client investment activity, negatively affecting trading volumes, fee income, and net revenue growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $23.044 for XP based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $26.21, and the most bearish reporting a price target of just $19.31.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be R$25.2 billion, earnings will come to R$6.8 billion, and it would be trading on a PE ratio of 13.0x, assuming you use a discount rate of 12.3%.
Given the current share price of $17.81, the analyst price target of $23.04 is 22.7% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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