© Reuters. XPO Logistics (XPO) valuation compelling however macro headwinds dampen progress – Citi
By Sam Boughedda
XPO Logistics (NYSE:) was reinstated with a Impartial ranking and a $42 per share worth goal at Citi on Wednesday.
Analysts instructed buyers in a be aware that whereas the corporate’s valuation “stays compelling,” they consider macro headwinds will “probably dampen tonnage progress,” even with simpler comps than friends.
“Trying into 2023, we predict freight weak spot in 1Q might drive earnings misses broadly throughout our TL and LTL protection, and we would choose to stay cautious forward of that time-frame. Following the spin of RXO, standalone XPO turns into considerably of a ‘present me’ story within the LTL sector,” wrote the analysts.
XPO Logistics shares are up round 1.86% at $38.37 per share to date on Wednesday, heading into the shut. Though the inventory has rallied round 28% within the final month, it’s nonetheless down roughly 17% in 2022.
“We’re updating our 4Q and 2023 EPS estimates to $0.85 and $3.15, respectively. Our changes mirror the stand alone XPO and account for roughly flat tonnage progress in 4Q and modestly damaging progress for 2023. On the yield facet, we consider LSD progress in 4Q is achievable. We count on ~60 bps of OR enchancment for 2022, which is throughout the firm’s guided vary,” added the analysts.
“Given its place as a decrease margin participant in comparison with friends, it’s probably that extra proof might be required to show that XPO can bridge the margin hole earlier than the corporate can slender the a number of unfold vs. greater margin friends.”
