XP (XP US) – Less Demanding Valuations, but the Overhang Still Weighs

Equity Bottom-Up

349 Views, 13 May 2022 23:28

EXECUTIVE SUMMARY

Itaú Unibanco’s acquisition of an 11.36% stake in XP in April is no strategic move; it is a contractual obligation that remained, after the regulator blocked Itaú’s acquisition plans
This adds to the existing overhang in XP shares, given that fellow XP shareholder Itausa deems its 11.5% XP stake to be non-strategic, having already made disposals through block trades
We remain cautious on XP shares based on the disposal overhang and competitive pressures in Brazilian wealth management undermining XP’s fundamentals; near term, Itausa warrants monitoring on its NAV discount

detail (5-minute read)

WHAT’S TRENDING

Insights