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When InvestingPro’s Fair Value model identified XP Inc. (NASDAQ:XP) as significantly undervalued on January 18, 2025, the Brazilian financial services company was trading at just $11.99 per share. Today, merely four months later, the stock trades at $18.91, delivering a remarkable 57.71% return and validating the model’s accuracy. For investors seeking similar opportunities, our Most undervalued list continues to identify potentially mispriced stocks across global markets.
XP Inc., with a market capitalization of $10.1 billion, has established itself as a leading technology-driven financial services platform in Brazil. When our Fair Value model flagged the stock, the company demonstrated robust fundamentals with $2.63 billion in revenue and $1.35 in earnings per share, despite experiencing volatile trading in the preceding months, including a significant 22.45% decline in November 2024.
The Fair Value analysis indicated a 43.29% potential upside, supported by the company’s strong financial health score of 3.37. This assessment proved particularly prescient as the stock steadily appreciated through early 2025, with notably strong performance in April and May, eventually reaching our target price range.
The stock’s ascent was supported by multiple positive analyst actions, including Morgan Stanley (NYSE:MS) raising their price target to $24 and UBS upgrading the stock to a buy rating. Even amid short-seller allegations, which temporarily impacted the stock price, XP’s fundamental strength and market position enabled it to maintain its upward trajectory.
InvestingPro’s Fair Value methodology combines multiple valuation approaches, including discounted cash flow analysis, peer comparisons, and analyst consensus targets, while incorporating market sentiment indicators. This comprehensive approach helps identify opportunities where market prices significantly diverge from intrinsic value, as demonstrated in XP’s case.
The success of this Fair Value call exemplifies the power of data-driven investment analysis. Learn more about InvestingPro to access our full suite of valuation tools, real-time Fair Value alerts, and comprehensive financial analysis that can help you identify similar opportunities before the market catches up.