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On Friday, Oppenheimer analysts adjusted their outlook on RXO, Inc. (NYSE: RXO), downgrading the company’s stock from Outperform to Perform. The revision follows increased economic uncertainty and a challenging trucking environment, which has led to a more cautious view of the company’s volume trajectory. The downgrade comes as RXO’s stock has declined over 42% in the past six months, with InvestingPro data showing the stock trading near its 52-week low of $15.67.
The Oppenheimer team has also revised their financial forecasts for RXO. They have reduced the expected adjusted EBITDA for the first quarter of 2025 to $20 million, a 37% year-over-year increase that includes contributions from RXO’s acquisition of Coyote, which was completed on September 16, 2024. This is a decrease from the previous estimate of $25 million and falls within the company’s guidance range of $20 million to $30 million. Additionally, the full-year estimates for 2025 and 2026 have been lowered to $132 million and $204 million, representing year-over-year increases of 12% and 54%, respectively. These figures are down from the earlier projections of $182 million and $333 million. According to InvestingPro data, RXO’s current EBITDA stands at $117 million, with analysts expecting significant growth in net income this year despite recent challenges.
The analysts highlighted that RXO, a leading tech-enabled truck brokerage provider in North America, stands to benefit from synergies through the integration of Coyote. Nonetheless, the firm’s operating environment is expected to remain challenging for the foreseeable future. As a result, Oppenheimer has withdrawn their price target for RXO shares.
RXO is currently trading at 15.8 times its enterprise value to estimated adjusted EBITDA for 2026, which has been discounted back one year at a 10% rate. Despite the downgrade, Oppenheimer acknowledges RXO’s position as a significant player in the truck brokerage industry and the potential for operational synergies. However, the near-term economic headwinds and market conditions have tempered their expectations for the company’s performance.
In other recent news, RXO Inc. reported its fourth-quarter earnings, revealing adjusted earnings per share of $0.06, aligning with analyst expectations. The company’s revenue slightly exceeded forecasts, reaching $1.67 billion, up 70% year-over-year, driven by the acquisition of Coyote Logistics. Despite the revenue increase, RXO’s outlook for the first quarter of 2025 seemed to underwhelm, with an expected adjusted EBITDA between $20 million and $30 million. Barclays (LON:BARC) analyst Brandon Oglenski revised RXO’s stock price target to $24 from $30, maintaining an Overweight rating. This adjustment follows RXO’s fourth-quarter results, where revenues surpassed expectations by 10%, although future estimates were lowered due to anticipated higher transportation costs and a decrease in managed transportation revenue.
The integration of Coyote Logistics is reportedly ahead of schedule, with RXO raising its estimate for annualized cost synergies to at least $50 million. The company experienced a 10% sequential increase in brokerage volume for the quarter, although year-over-year volume declined by 6%. RXO’s gross margin decreased to 15.5% in the fourth quarter from 18% the previous year, reflecting ongoing softness in the freight market. CEO Drew Wilkerson emphasized the company’s strategy of strategic investments and cost control amid these market conditions.
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