Sun, June 16, 2024

XP Inc. Stock Falls 18% After Q1 Earnings Report

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Quick Look:

  • Despite meeting revenue expectations, XP Inc.’s stock fell by 18%, from US$21.94 to US$17.99.
  • Q1 revenue was R$4.1 billion, matching expectations; the full-year 2024 revenue forecast projects R$17.1 billion.
  • The company expects a 13% increase in revenue and a 4.2% rise in EPS for 2024. Projected annual growth rate – 18%.
XP Inc. (NASDAQ: XP) recently released its Q1 earnings report, revealing mixed financial results that led to a significant decline in its stock price. The company’s stock fell by 18%, dropping from US$21.94 to US$17.99, despite meeting quarterly revenue expectations.

Q1 Revenue Hits R$4.1B; Full-Year Forecast Cut to R$17.1B

The Brazilian financial services company reported revenues of R$4.1 billion, which aligned with market expectations. However, the earnings report did not satisfy investors, likely due to the revised forecasts for 2024.

XP Inc. now anticipates revenues of R$17.1 billion, a slight decrease from the previous forecast of R$17.3 billion. Similarly, the earnings per share (EPS) for 2024 have been adjusted downward to R$8.35 from the prior estimate of R$8.51.

XP Inc. Projects 13% Revenue Growth, 4.2% EPS Rise in 2024

Despite these revisions, XP Inc. remains optimistic about its growth prospects. The company forecasts a 13% increase in revenue and a 4.2% rise in EPS for the year, reflecting a strong growth trajectory compared to the broader industry. XP Inc.’s annualised growth rate is projected to reach 18% by the end of 2024, significantly outpacing the industry average of 5.5% annually.

Analysts Set Price Target at US$28.46, High of US$32.69

Analysts maintain a positive outlook on XP Inc., with a consensus price target of US$28.46. The range of price targets varies, with the highest at US$32.69 and the lowest at US$21.80, indicating a generally favourable sentiment among market watchers. The company’s historical growth rate has also been impressive, averaging 12% per annum over the past three years.

Investor Sentiment Stable, Revenue and EPS on Track

Investor sentiment surrounding XP Inc. remains stable, with no major revenue or EPS tracking changes noted. The company’s earnings have been in line with expectations, and analysts have not adjusted the price targets.

XP Inc. Announces R$1.0B Share Repurchase Program

In addition to its earnings report, XP Inc. announced a share repurchase program set to commence on May 23, 2024. The program authorises the repurchase of up to R$1.0 billion worth of Class A common shares, funded from the company’s existing cash reserves. This move aims to enhance shareholder value, and the company expects to execute it based on market conditions. The program is slated to conclude by the end of 2024, though it may be adjusted or discontinued based on corporate discretion and market dynamics.

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