Buying XP Inc. at $18.56: A Strategic Bet on Brazil’s Financial Revolution

The financial democratization of Brazil has long been a story of untapped potential. Nowhere is this clearer than in the trajectory of XP Inc. (NASDAQ: XP), which has just announced a bold R$1.0 billion share repurchase program—a move that underscores its confidence in its undervalued stock and its leadership in one of Latin America’s fastest-growing financial markets. With shares trading at just $18.56, and a GuruFocus valuation of $60.21 suggesting a 224% upside, investors are being offered a rare opportunity to buy into a company poised to capitalize on Brazil’s economic transformation.

The Repurchase Program: A Signal of Strength and Confidence

By dedicating R$1 billion to repurchase its own shares, XP’s management is sending a clear message: the stock is undervalued, and cash reserves are strong. The program, which can proceed through open-market purchases or private deals until the end of 2026, leverages XP’s robust liquidity—its Basel III Liquidity Coverage Ratio of 19% as of Q1 2025 comfortably exceeds its 16%–19% target. This is not a desperate move to prop up shares but a strategic allocation of capital to reduce dilution and amplify shareholder value.

The flexibility to pause or adjust the program as markets shift ensures XP isn’t overextending. Yet the mere announcement itself is a confidence vote. Consider that XP’s Q1 2025 earnings beat estimates by 6%, with adjusted EPS hitting R$2.29 versus analysts’ R$2.16. This outperformance, combined with a 13% year-over-year surge in total client assets to R$1.33 trillion, underscores a company in control of its growth narrative.

Why the Stock Is Undervalued—and Why It Won’t Stay That Way

Analysts’ conservative average price target of $18.88 suggests they’re underestimating XP’s long-term potential. GuruFocus’s $60.21 valuation, however, tells a different story—one aligned with XP’s dominance in Brazil’s financial democratization. The gap here is striking.

Part of the disconnect lies in near-term headwinds, such as a 15% YoY drop in equities revenue. But fixed income revenue surged 44% YoY, reflecting XP’s diversified strategy. More critically, XP’s Net Promoter Score of 73—a metric that has doubled since 2020—reveals unmatched client loyalty. This is a company that’s not just growing assets but also deepening its relationship with Brazil’s emerging middle class, which is increasingly investing in markets and wealth management.

The Case for Immediate Action: Growth, Valuation, and Analyst Optimism

The data is compelling: XP’s retail revenue rose 10% YoY in Q1, and its client base continues to expand. Analysts, while cautious in their targets, are far from bearish. Their average recommendation of “Outperform” (2.2 out of 5) reflects belief in XP’s ability to capitalize on Brazil’s financial boom. Meanwhile, GuruFocus’s valuation implies the market has yet to fully recognize XP’s role as a catalyst for democratizing wealth in a nation of 215 million people.

The repurchase program itself acts as a catalyst. By reducing the share count, XP boosts its earnings per share (EPS) without needing immediate revenue growth—a critical lever for attracting investors. With a current P/E ratio of just 8.9 (based on its Q1 EPS of R$2.29), XP is trading at a discount to its growth prospects.

Navigating the Risks, Embracing the Opportunity

Skeptics will point to Brazil’s macroeconomic uncertainties or XP’s reliance on fixed income. Yet these risks are already priced into the stock. The company’s liquidity buffer and NPS score suggest operational resilience. Meanwhile, the repurchase program’s flexibility ensures XP can navigate volatility without compromising its growth agenda.

Conclusion: The Time to Act Is Now

XP Inc. is at a pivotal moment. Its R$1 billion repurchase program isn’t just a financial tool—it’s a declaration of intent. With a stock price that’s 70% below its intrinsic value (per GuruFocus), a client base expanding into new markets, and a management team executing with discipline, this is a buy signal investors ignore at their peril.

The question isn’t whether XP will thrive as Brazil’s economy matures—it’s whether you’ll be part of the upside. At $18.56, this is your chance to board a rocket ship before the world catches up.

Act now—before the market does.