Financial firm TD Cowen adjusted its price target on shares of XPO Logistics (NYSE:XPO), listed on the New York Stock Exchange under the ticker NYSE:XPO, reducing it slightly to $142 from a previous target of $143. Despite this change, the firm has maintained its Buy rating on the company's stock.
The adjustment comes after an evaluation of the company's quarter-to-date trends. In particular, the August figures for tonnage per day showed a 4.6% decrease, which did not align with normal seasonal patterns. This underperformance has been attributed to XPO's connection with the currently weak industrial economy. Consequently, TD Cowen has revised its volume assumptions for the second half of the year to reflect these trends.
Nevertheless, the firm remains optimistic about XPO's prospects, citing confidence in the company's ability to manage yields and costs effectively. This confidence is reflected in the maintained yield and margin estimates. The price target revision is based on projections for the year 2026, with an earnings estimate of $5.80 per share and a consistent application of a 24.5x earnings multiple.
The analyst's statement highlighted the rationale behind maintaining the Buy rating: "We update our XPO model to reflect QTD trends. Aug tonnage/day -4.6% underperformed seasonality given XPO's exposure to a persistently soft industrial economy, and we lower 2H volume assumptions accordingly. We maintain yield and margin estimates as we remain confident in self-help yield and cost measures. Using our '26 estimate of $5.80 (24.5x multiple intact), our PT moves to $142. Reit Buy."
XPO Logistics' stock continues to be seen favorably by TD Cowen, with the firm expecting the company's self-implemented measures to yield positive results despite the current industrial economic challenges.
XPO Logistics, Inc. has been making significant strides. The logistics company has reported a robust second-quarter performance, surpassing market expectations with an adjusted EBITDA of $343 million and adjusted earnings per share of $1.12.
This success was largely attributable to the North American Less-Than-Truckload (NA LTL) segment, which saw significant share gains and top-line growth. As a result, XPO's Q2 revenue increased by 9% to $2.1 billion, with a noteworthy 41% rise in adjusted EBITDA.
XPO's LTL segment's adjusted operating income grew by 51% to $214 million. In Europe, the company's segment revenue and EBITDA outperformed the industry, growing by 4% and 7%, respectively. The company concluded the quarter with $250 million in cash and $836 million in liquidity.
BMO Capital maintained its Outperform rating and $145.00 stock price target for XPO Logistics, following reports that the company may have resumed attempts to divest its European transportation segment. Similarly, Stifel raised its price target for XPO from $120.00 to $125.00, maintaining a Buy rating on the stock.
InvestingPro Insights
As TD Cowen maintains a positive outlook on XPO Logistics with a minor price target adjustment, it's valuable to consider the latest real-time data and insights from InvestingPro. XPO's market capitalization stands at a robust $12.42 billion, reflecting significant market confidence. Despite some analysts revising their earnings downwards for the upcoming period, XPO is trading at a low P/E ratio of 36.93 relative to its near-term earnings growth potential. This could suggest that the stock is undervalued given its growth prospects, which is further supported by a PEG ratio of just 0.11, indicating that XPO's earnings growth may not be fully reflected in its current stock price.
Moreover, with a Price / Book ratio of 8.83, investors are paying a premium for the company's net assets, which can be justified if the market anticipates strong future performance. This is in line with the InvestingPro Tip that highlights XPO's high return over the last year, with a 55.63% one-year price total return, showcasing the company's strong market performance despite the economic headwinds.
For readers interested in further insights, there are 11 additional InvestingPro Tips available, which offer a comprehensive analysis of XPO Logistics' financial health and future outlook. These tips can be an invaluable resource for investors looking to make informed decisions, accessible through InvestingPro's platform.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.