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On Tuesday, Citi analyst Ariel Rosa adjusted the financial outlook for GXO Logistics Inc. (NYSE: GXO), reducing the price target from $60.00 to $56.00 while still advocating a Buy rating for the stock. The revision reflects concerns about foreign exchange (FX) headwinds, particularly due to the company’s significant revenue generation outside the United States. For detailed analysis of GXO’s financial health and market position, investors can access comprehensive InvestingPro Research Reports, which provide expert insights on over 1,400 US-listed companies.
GXO Logistics, with around 40% of its revenue coming from the U.K. and another 30% from Continental Europe, is particularly vulnerable to currency fluctuations. The weakening of the British Pound (GBP) and the Euro against the U.S. Dollar has put pressure on the company’s financials. In light of these challenges, Citi has refined its model for GXO, updating projections for the fourth quarter of 2024, as well as for the years 2025 and 2026. InvestingPro subscribers can access advanced currency impact analysis tools and real-time financial metrics to better understand how exchange rate fluctuations affect multinational companies.
The new price target is based on a 9.5x enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple on the adjusted EBITDA forecast for 2025. As a result of the ongoing freight recession and the company’s exposure to European currencies, Citi has revised its 2025 adjusted EBITDA estimate down to $901 million from the previous $943 million.
For the fourth quarter of 2024, the adjusted EBITDA expectation has been lowered to $251 million from $259 million, and the adjusted earnings per share (EPS) forecast has been reduced to $0.90 from $1.02. The analyst cites the decline in the Euro and Sterling as the primary reasons for these adjustments. Additionally, the adjusted EPS projections for 2025 and 2026 have been decreased to $3.10 and $3.70, respectively, from the earlier estimates of $3.50 and $4.20, due to the anticipated impact of macroeconomic and political uncertainties on freight activities.
In other recent news, FedEx Corp (NYSE:FDX) has announced several significant developments. The company’s Board of Directors approved a shift of its fiscal year-end from May 31 to December 31, effective June 1, 2026, aiming to streamline financial reporting. FedEx also initiated exchange offers for several series of its outstanding senior notes as part of preparations for the planned separation of its FedEx Freight business.
FedEx’s future independent FedEx Freight is expected to form a new publicly traded entity. Stifel, a financial services firm, raised its price target on FedEx shares from $321.00 to $368.00, maintaining a Buy rating on the stock. This adjustment followed FedEx’s second-quarter fiscal year 2025 earnings report, where the company posted an adjusted earnings per share (EPS) of $4.05.
On the other hand, Bernstein SocGen Group expressed a more cautious approach towards FedEx, currently rated at MarketPerform. Meanwhile, rival United Parcel Service Inc. (NYSE:UPS) released a revenue forecast that fell short of market expectations, causing concerns that the challenges faced by UPS may also affect FedEx’s business. These are some of the recent developments that investors should note.
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