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XP Inc. (NASDAQ:XP) stocks diverged down 2.5% in Tuesday morning trading after Goldman Sachs downgraded the Brazilian investment bank to Neutral from Buy, “given risks that rates in Brazil could remain high longer.”
Median market expectations for the Selic reference rate have increased along with inflation expectations, the firm said in a note.
Expectations imply real rates of 5.8% in 2024 and 5.4% in 2025, “which may not be sufficient to stimulate higher inflows, particularly towards capital investments, which GSCO sees as the main positive catalyst for XP.”
The valuation of XP (XP), which trades at 13.0 times the estimated 2024 price-to-earnings ratio, “is relatively undemanding,” Goldman said, although it noted there are downside risks to the consensus estimates.
The Neutral rating aligns with the SA Quant system's rating of Hold and differs from the average sell-side analyst rating of Strong Buy.
