Market Overview

Headwinds, Competition For XPO Logistics Send KeyBanc To Sidelines

Share:
Headwinds, Competition For XPO Logistics Send KeyBanc To Sidelines
Related XPO
Another Step In The Comeback Of Roadrunner: A Mainstream Analyst Is Following Them Again
Stung By Poor Fiscal Q2 Print, FedEx Executives Look To Guide Analysts Toward Better Times
SHAREHOLDER ALERT: Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in ... (GuruFocus)

Competitive concerns around big and bulky final mile providers prompted a KeyBanc Capital Markets analyst to move to the sidelines on XPO Logistics Inc (NYSE: XPO).

The Analyst

Analyst Todd Fowler downgraded XPO Logistics from Overweight to Sector Weight

The Thesis

Public carriers have expanded their presence in the BBFM market recently, with a spate of M&A news flow including J B Hunt Transport Services Inc (NASDAQ: JBHT) announcing its second BBFM buy in 18 months, Fowler said in a Sunday note.

The announcements validate the attractiveness of BBFM, with e-commerce growing in the mid-teens compared to low-single digit growth for freight as a whole, the analyst said. 

XPO, with its first-mover advantage, has a 7-percent share, but competition from well-established and well-capitalized firms could slow its growth from to the mid-to-high teens to low-double digits, Fowler said.

XPO's updated guidance reflects geopolitical uncertainties and macroeconomic weakness in Europe, where it has the highest exposure, he said. 

Notwithstanding BBFM softness, Fowler said XPO has co-specific avenues to drive revenue growth and margin improvement. The analyst sees favorable free cash flow supporting reduced leverage and share repurchases under the $1-billion authorization announced in mid-December.

Against this backdrop, KeyBanc said the hiring of a CFO with public company exposure and an acquisition track record could be a catalyst. The firm also sees XPO's valuation as reasonable.

"That said, final mile has been viewed as a key differentiator, with increased competition a potential, incremental negative, while ongoing European headwinds imply higher growth in remaining segments to achieve EBITDA targets." 

The Price Action

XPO shares were slipping by 4.35 percent to $60.26 at the time of publication Monday. 

Related Links:

BofA: Buy The Dip In XPO Logistics

Moody's Lifts Ratings On More Than $3B Of XPO Logistics Debt

Photo courtesy of XPO Logistics. 

Latest Ratings for XPO

DateFirmActionFromTo
Jan 2019KeyBancDowngradesOverweightSector Weight
Dec 2018BarclaysMaintainsOverweightOverweight
Dec 2018KeyBancMaintainsOverweight

View More Analyst Ratings for XPO
View the Latest Analyst Ratings

Posted-In: KeyBanc Capital Markets Todd FowlerAnalyst Color Downgrades Analyst Ratings Best of Benzinga

 

Related Articles (XPO + JBHT)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MDRXKeyBancUpgrades0.0
ANETNomuraUpgrades260.0
CNPRBC CapitalUpgrades34.0
FISVOppenheimerUpgrades88.0
FNDUBSUpgrades37.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Top 3 Price Prediction Bitcoin, Ripple, Ethereum: The Ground Is Not Far, But We Can Still Visit Floor -1, Bargains Section!

EURUSD Forecast: Euro Is Treading Water In Mid-1.1400s