Should Investors Load Up on XPO Logistics (XPO) Stock? This Analyst Says Yes
Trucking and logistics company XPO Logistics (XPO) is hoping to finish 2018 on a strong note. After plummeting more than 30% between last Tuesday and Thursday, the stock rebounded more than 15% Friday to close the week down “only” 21% down. The reason for such a plummet was the company’s earnings guidance cautioning investors on EBITA growth – while the company had initially expected year-over-year growth (2019) between 15-18%, it revised it down to 12-15%, which caused investors to quickly flee the stock.
Even amid the free-fall and the stock’s poor year (even with the recovery, the stock is still down 40% for the year), Oppenheimer analyst Scott Schneeberger reiterates his Outperform rating on XPO with a $96 price target, which implies nearly 80% upside potential for the stock (To watch Schneeberger’s track record, click here)
Schneeberger “view(s) 2017-2018 new business wins ramping/incremental wins (as) likely sufficient to drive solid 2019 growth,” even amid a feared slowdown in economic growth. Furthermore, the analyst says that “although XPO’s 2019 FCF guidance was below expectations, the blend of drivers didn’t signal significant fundamental business deterioration.” Schneeberger is bullish on XPO because of its ability to conduct business, even as its financials aren’t necessarily depicting a pretty picture.
Schneeberger concedes that there has been a “tough run of negative sentiment” but says the “story remains little change.” He sees “substantial upside opportunity as XPO is now trading at just 6.1x EV/EBITDA our maintained (organic) $1.8B 2019E adjusted EBITDA” and the possibility of growth through mergers and acquisitions.
While XPO’s chart tells one story, TipRanks tells another. TipRanks analysis of 12 analyst ratings on the company shows a consensus Strong Buy, with 11 recommending Buy and one recommending Hold. The average price target is $100.33, representing a 95% upside from current levels. Most significant is the lowest price target is $80, representing a 55% increase from today’s price. (See XPO’s price targets and analyst ratings on TipRanks).