XPO Logistics Expects To Earn $1.5 Billion By 2019: Is The Stock A Buy?

XPO Logistics Inc XPO recently reported a mix second-quarter print in which it lost $0.16 per share – more than the $0.07 loss expected while adjusted EBITDA of $79.7 million was ahead of the $48.1 million analysts were expecting.

XPO Logistics also raised its long-term revenue and EBITDA guidance to $23 billion and $1.5 billion, respectively, by 2019. The company previously guided towards revenue of $9.5 billion and $575 million of EBITDA by 2017.

XPO has a conference call scheduled for Thursday at 8:30 a.m. ET to further discuss its results and outlook.

FBR: XPO Will Triple Again In Size

John Mims of FBR & Co. commented in a note that XPO's new guidance implies the company will "triple again in size" over the next four years. The analyst noted that with $1.2 billion in cash as of the end of the second quarter, an untapped ABL facility, and "abundant" access to the capital markets, the company's new targets are "very likely achievable."

Mims also commented on XPO's European segment which offered a "meaningful impact" in the second quarter. The company highlighted a new contract logistics facility it is opening in the U.S. to service Norbert's long-time Spanish retailer clients. The analyst added that these "cross-selling wins" will be "prominently" displayed to clients and investors moving forward as the company highlights its "tremendous scale advantages" that it can offer as a global entity.

Shares remain Outperform rated with an unchanged $60 price target.

Oppenheimer: $1.5 Billion Goal Exceeds Expectations

Scott Schneeberger of Oppenheimer commented in a note that he had already estimated XPO's EBITDA in 2019 to reach $1.2 billion and that the company's own $1.5 billion EBITDA guidance likely exceeded investors' expectations. The analyst continued that the $1.5 billion guidance suggests a 2017 EBITDA over the $1 billion mark, a figure that also exceeded the analyst's $900 million.

Schneeberger added that the company is expected to spend $5 billion on acquisitions through 2019 through its already existing cash on hand, future free cash flow generations, and net debt at a 3-4x leverage.

Schneeberger concluded that XPO's guidance are "seemingly ambitious" but yet "achievable" as it represents a low double-digit organic EBITDA compounded annual growth rate.

Shares remain Outperform rated with an unchanged $56 price target.