mBank upgraded
his rating on XTB shares to “buy” from “sell” and
raised his price target to 87 zlotys from 74 zlotys, according to
Bloomberg data. The shift follows the Polish broker’s third-quarter
earnings, which showed profitability per lot falling to 152 zloty
from 229 zloty in the second quarter.

The
preliminary results presented by the broker last week were the weakest since
late 2022. The latest recommendation, however, focuses on positive projections
for profitability per lot and a significant increase in the client base in
October.

XTB Upgraded to Buy as
Analyst Raises Price Target Despite Weak Quarter

mBank’s
analyst, Mikołaj Lemańczyk, now expects XTB to post net income of
678.9 million zlotys in 2025, about 9 percent below the market
consensus. His 2026 forecast of 711 million zlotys sits
24 percent under analyst expectations.

XTB
reported third-quarter net profit of 53.2 million zlotys, well
short of the 154 million zlotys consensus estimate. Revenue dropped 20
percent year-over-year to 375.8 million zlotys. The company attributed the
weakness to predictable market trends and narrow trading ranges that
created favorable conditions for clients but squeezed the broker’s
market-making results.

“This led
to trends that could be predicted with higher probability than in the
case of larger directional market moves, which created favorable
conditions for transactions concluded in a narrow market range,” the company
stated in its report. “In such cases, we generally observe a larger
number of profitable transactions for clients, which results in a
decrease in results or losses from market making.”

Volatility Remains
Key Variable

Chief
Executive Omar Arnaout said management focuses on factors within its
control, namely client acquisition and product development. The company
added more than 100,000 users to its investment app in October alone,
the highest monthly increase in its history. Total clients reached
approximately 2 million by late October, with half classified as
active.

“With such
a client base and high volatility, nothing would prevent XTB from
generating 500 million zlotys in net profit,” said Paweł Szejko,
the broker’s Chief Financial Officer. “Under conditions like in the
third quarter – low volatility – this was not possible. Our clients were
making money, and we were losing on market making, which was
reflected in the profitability per lot level.”

Lemańczyk
noted that exceptional quarters will likely offset weak ones
going forward. If market conditions in the third quarter had matched
those in the first quarter of 2025, XTB would have recorded
net profit closer to 250 million zloty, he estimated.

Under first-quarter 2024
conditions, profit could have approached 450 million zloty.

Marketing Budget Set for
Further Growth

Management
plans to maintain aggressive marketing
spending to compete for leadership positions in key
markets. Arnaout indicated the 2026 marketing budget could increase
40 to 50 percent from current levels, though headcount growth will be
tightly controlled.

“There is
no other way to compete in the most important markets for a leadership
position,” Arnaout said.

The company
expects to
launch options and cryptocurrencies by year-end or early 2026.
Cryptocurrencies may be offered through a Cyprus license, which would
restrict marketing communications in Poland.

XTB’s
nominal trading volume rose 61 percent year-over-year in the third quarter
despite the profitability squeeze. Maciej Marcinowski, an analyst at
Trigon brokerage, said clients proved even more “caloric” than
expected, though the mix of instruments traded affects margins significantly.

The
broker’s shares fell about 4 percent following the quarterly results
and are down 27 percent from their May 13 peak. If the recommendation
proves accurate, they could rebound by almost 30 percent and return to the area
of their previous all-time high.