Xpo Beats Q1 Expectations, Analysts Maintain Strong Buy Rating

TD Cowen's Jason Seidl raised their price target on Xpo (NYSE: XPO) by 1.5% from $136 to $138 on May 6, 2024. The analyst maintained their Strong Buy rating on the stock.

Xpo, a provider of freight transportation services, recently reported its Q1 2024 earnings, exceeding expectations. Seidl summarized the results by stating, "the company handily beat expectations driven by tonnage and OR beats." Additionally, the analyst noted that trends in April 2024 were better than seasonality, and pricing renewals remain robust.

For Q1 2024, Xpo reported earnings per share (EPS) of $0.81, surpassing the Thomson Reuters consensus estimate of $0.67 by 44.6%. This figure also represents a significant increase of 45% compared to Q1 2023's EPS of $0.56. The company's revenue for the quarter stood at $2.02 billion, a 5.8% improvement from Q1 2023's $1.91 billion.

Looking ahead, Xpo's management has provided guidance for FY 2024, including a projected capital expenditure (capex) range of $700 million to $800 million and an expected interest expense of $240 million to $260 million. CEO Mario Harik expressed satisfaction with their strong Q1 financial results, which exceeded expectations and set a solid foundation for the year. Harik highlighted the company's revenue growth of 6%, adjusted EBITDA growth of 37%, and adjusted diluted EPS growth of 45% year-over-year. In the North American LTL segment, Xpo demonstrated strong execution of its LTL 2.0 plan, resulting in a 50% increase in adjusted operating income and an improved adjusted operating ratio of 85.7%.

Xpo's performance has garnered positive sentiment from analysts, with 100% of top-rated analysts currently rating the stock as a Strong Buy or Buy. No analysts recommend holding the stock, and none suggest selling it. The consensus forecast among analysts is that Xpo will achieve an EPS of $4.4 in the upcoming year, which would represent a remarkable 110.6% increase year-over-year.

In terms of stock performance, Xpo has experienced a 1.6% decline since its latest quarterly report on May 3, 2024. However, when comparing the stock price to the previous year, Xpo has seen significant growth of 128.6%. During this period, Xpo has outperformed the S&P 500, which has increased by 25.2%.

Analyst Jason Seidl, from TD Cowen, is highly regarded in the industry, ranking in the top 22% of Wall Street analysts. With an average return of 5.3% and a win rate of 53.4%, Seidl specializes in the Industrials sector.

Xpo Logistics Incorporated, based in Greenwich, CT, offers freight transportation services in the U.S. and internationally. The company's North American LTL segment focuses on providing customers with less-than-truckload (LTL) services. Additionally, Xpo operates the Brokerage and Other Services segment, which offers last-mile logistics for heavy goods sold through e-commerce, omnichannel retail, and direct-to-consumer channels, as well as other non-core brokered freight transportation modes. The company was incorporated in 2000 and has since become a prominent player in the industry.

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