XP Inc. reports after the close today with a familiar gap between analyst conviction and market reality — the stock has drifted 6% lower over the past month to $15.70, even as the Street keeps Buy ratings intact and targets well above current levels.
The lending market signals no real bearish pressure. Borrow availability is extraordinarily loose, running at over 8,000% — meaning shares available to borrow dwarf the shares actually borrowed by an enormous margin. Cost to borrow is negligible at 0.53%, despite a 17% weekly uptick that amounts to just a few basis points in absolute terms. Short interest at 4.6% of the free float is modest and has barely moved, edging up about 1% on the week while drifting lower month-on-month. Options positioning is almost entirely skewed toward calls: the put/call ratio of 0.11 is well below its already-low 52-week high of 0.89, pointing to a market that is structurally long-biased on XP. The ORTEX short score of 38 is mid-range and stable, confirming there is no mounting short thesis here.
The bull-bear debate is less about conviction and more about timing and macro. UBS carries a Buy with a $25 target — trimmed from $28 in June — and Jefferies initiated at Buy with a $22 target in January. Both targets imply substantial upside from current levels. Bears, implicit in the stock's underperformance, point to Brazil's interest rate environment and the BRL/USD drag that compresses USD-denominated returns for a company whose revenues are local-currency. The stock's P/E of 7.1x and price-to-book of 1.5x are undemanding by any standard, and a 9.3% forward earnings yield positions XP as a value proposition — if Brazilian macro stabilises. Closest peers had a rough week too: fell more than 5%, dropped over 4%, and lost 3.5%, suggesting the weakness in XP reflects sector headwinds rather than company-specific deterioration.
The institutional picture is broadly constructive. BlackRock added nearly 2.5 million shares in its most recent filing. ARGA Investment Management added almost 4 million shares. Marshall Wace — typically a more tactical holder — added over 3.2 million. The two prior earnings prints both produced negative reactions: the May report saw the stock fall roughly 4.6% on the day and an additional 2.1% report dragged shares down 10% over the following five sessions. That pattern sets a cautious backdrop even if the positioning data itself is benign.
The print will test whether XP's cheap valuation and analyst consensus can finally produce a catalyst, or whether the macro overhang on Brazilian financial stocks continues to keep the gap between targets and price stubbornly wide.
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