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Investing.com - Morgan Stanley (NYSE:MS) has raised the price target on XP Inc. (NASDAQ:XP) to $26.00 from $24.00 while maintaining an Overweight rating on the stock. The stock currently trades at a P/E ratio of 12.26 and a favorable PEG ratio of 0.79, suggesting attractive valuation levels according to InvestingPro data.
The price target increase reflects Morgan Stanley’s updated earnings per share (EPS) estimates for the financial services company, with 2025 EPS now projected at $1.65, up from the previous estimate of $1.58.
For 2026, Morgan Stanley has also revised its EPS estimate upward to $1.90 from the prior forecast of $1.83, representing projected local currency EPS growth of 18% for that year.
The firm’s updated projections include expectations for 14% local currency EPS growth in 2025, followed by the stronger 18% growth rate in 2026.
Morgan Stanley anticipates XP will deliver a return on equity (ROE) of 23% in 2025, followed by 22% in 2026, according to the analysis.
In other recent news, XP Inc. reported its first-quarter earnings, surpassing analyst expectations. The company posted adjusted earnings per share of R$2.29, beating the anticipated R$2.16. Although revenue was slightly below the consensus forecast at R$4.35 billion, it marked a 7% increase from the previous year. XP Inc. saw its total client assets rise to R$1.33 trillion, a 13% increase year-over-year, with net inflows totaling R$24 billion for the quarter. Retail revenue grew by 10% to R$3.44 billion, largely due to a 44% increase in fixed income revenue, despite a 15% decline in equities revenue. The company’s CEO, Thiago Maffra, highlighted the solid results and operational efficiency that contributed to a record adjusted net income of R$1.2 billion, up 20% from the prior year. XP Inc. also maintained a strong capital position with a BIS ratio of 19.0% and announced a new R$1 billion share repurchase program. These developments reflect XP Inc.’s continued growth and strategic focus amidst market volatility.
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