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On Wednesday, Benchmark analysts revised their price target for XPO Logistics (NYSE:XPO) shares, reducing it to $130 from the previous target of $160, while still upholding a Buy rating on the stock. Currently trading at $91.46 with a market capitalization of $10.8 billion, XPO appears undervalued according to InvestingPro analysis. The adjustment comes amid a challenging freight environment, which the firm acknowledges is impacting the industry.
According to Benchmark analyst Chris Kuhn, XPO Logistics has managed to drive sequential pricing growth and operational ratio (OR) improvement through enhanced service quality despite the weak freight market. With an EBITDA of $1.2 billion and revenue growth of 4.24% in the last twelve months, the company's strategic expansion of terminals and the growth of its local account business have been pivotal in counterbalancing the broader domestic freight weaknesses. These efforts have resulted in volume levels that are believed to align with the company's own guidance. InvestingPro subscribers can access detailed operational metrics and 12+ additional ProTips about XPO's performance.
Benchmark's analysis indicates that quarter-to-date (QTD) volume trends are somewhat consistent with their estimates. However, due to a sub-seasonal increase in March—a critical month that contributes significantly to the first quarter's total volume—Benchmark has slightly lowered its estimates for XPO Logistics.
The firm also noted that while XPO Logistics has not disclosed QTD revenue per hundredweight (rev/cwt) excluding fuel costs, the 6.3% increase in rev/cwt during the fourth quarter was a positive outcome that exceeded expectations. Benchmark anticipates that the company's revenue growth will continue to accelerate in the first quarter, aligning with their estimates.
Despite the positive outlook on pricing and volume, Benchmark has adjusted the price target to $130, taking into account the ongoing uncertainties within the freight market, including tariff concerns. With analyst targets ranging from $85 to $170 and the next earnings report due on May 2, 2025, investors should note that XPO maintains a FAIR financial health score according to InvestingPro's comprehensive analysis. These factors could potentially lead to a less robust seasonal build in the second quarter than usual.
In other recent news, XPO Logistics, Inc. has announced a significant development with the authorization of a $750 million stock repurchase program. This initiative replaces the previous plan from February 2019, which had $503 million remaining. The buyback will be conducted at management's discretion, utilizing methods such as open market purchases and privately negotiated transactions. In related updates, Citi analyst Ariel Rosa adjusted XPO's stock price target to $148 from $170, maintaining a Buy rating, while noting a year-over-year decrease in daily tonnage. Despite this, XPO's CEO expressed optimism about exceeding seasonal expectations and improving the operating ratio.
Additionally, Stifel has upgraded XPO's stock rating from Hold to Buy, setting a price target of $147, citing the company's successful integration strategy and operational focus. Benchmark analysts have also increased their price target for XPO to $160, maintaining a Buy rating, and highlighting improvements in less-than-truckload (LTL) volume trends and operational ratio. These developments reflect XPO's strategic efforts and potential for growth in the logistics and transportation sector.
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