BofA Lowers XPO Logistics Price Target In Wake Of 2019 Guidance Cut

XPO Logistics Inc XPO reported disappointing fourth-quarter results and lowered its 2019 guidance Thursday.

This may cause a “sentiment shift” that could persist for the next several quarters, according to Bank of America Merrill Lynch.

The Analyst

BofA's Ariel Rosa maintained a Buy rating on XPO Logistics and reduced the price target from $76 to $65.

The Thesis

XPO Logistics reported Q4 adjusted EPS of 72 cents, representing 61 percent year-on-year growth but missing the consensus expectation of 84 cents.

Adjusted EBITDA came in at $380 million, representing 13-percent growth but short of the estimate, Rosa said in a Friday note. 

The logistics company slashed its adjusted EBITDA growth projection for 2019 from 12-15 percent to 6-10 percent, citing economic headwinds in Europe as well as the loss of the postal injection business with its largest customer.

This customer, which is most likely Amazon.com, Inc. AMZN, is expected to significantly reduce its business with XPO Logistics starting in Q1, the analyst said. 

The is the second straight quarter in which the loss of a customer has meaningfully impacted the company’s results, Rosa said, adding that this “undermines the narrative” that having a diversified customer base makes XPO Logistics resilient to changes in a single account.

Price Action

XPO Logistics shares were plunging 17.55 percent at $49.10 at the time of publication Friday. 

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Photo courtesy of XPO Logistics.