XPO Logistics Analyst Slashes Price Target By 34%; Says Brokerage Separation Simplifies Story At XPO - XPO (NYSE:XPO)

Raymond James analyst Patrick Tyler Brown reiterated an Outperform rating on the shares of XPO Logistics Inc XPO and lowered the price target from $70 to $46.
The rating follows the spin-off of the company’s brokerage business (RXO) which was completed on Nov. 1, leaving the N.A. LTL (Less Than Truck load) business and the European transport business as one entity.
The analyst believes the separation simplifies the story at XPO as it is now effectively a pure-play LTL, driving multiple expansion in time.
Brown’s primary takeaway from 3Q22 results within N.A. LTL was the sequential acceleration in tonnage throughout the quarter, with October continuing this trend with tonnage up +3% y/y.
He notes that in recent tonnage updates from LTL carriers that sequential declines occurred from October into November, something that he is certainly keeping an eye on.
The analyst has been encouraged by management’s reinvigorated tone and newly unveiled “LTL 2.0" plan made over the past several months.
The plan includes strategies to drive market share, optimize pricing, and improve efficiencies.
Tangible benefits from a slew of tech enhancements can be seen through damage frequency being at its lowest level since 2016 and employee engagement/satisfaction at record highs.
Brown is excited about the potential of what can be improved upon at XPO, particularly now that LTL is the core focus.
He views XPO Logistics as a solid pure-play LTL carrier that has greatly simplified their story given the spin-offs of their logistics and brokerage segments over the last couple of years.
That said, this will create more of a focus on LTL, with significantly more investment compared to years past.
Moreover, the diversity of these investments should prove fruitful from a volume, pricing, and productivity perspective, helping to close the gap between LTL peers.
Price Action: XPO shares are trading lower by 4.64% at $36.37 on the last check Monday.
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