Oppenheimer Sees Compelling Entry Point in XPO Logistics (XPO)
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Oppenheimer analyst Scott Schneeberger reiterated an Outperform rating and $42 price target on XPO Logistics (NYSE: XPO) noting a compelling entry point.
Schneeberger commented, Following XPO's favorable 2Q16 inflection point, when it turned EPS/FCF positive, we anticipate solid 3Q16 performance and maintain our 3Q16E EBITDA of $350M ($347M consensus; 3Q16 EBITDA guided in-line with 2Q16 of $354M) as we interpret business conditions/XPO's solid execution as little changed q/q. Incrementally, we view positively XPO's recently announced/closed (10/27/16) divestiture of its (relatively lower multiple) North American Truckload business much sooner than we'd anticipated. The move streamlines XPO's portfolio and is favorable to the company's long-term growth/ROIC/debt profile/capex/free cash flow profile. Correspondingly, we anticipate XPO decreasing its capex and increasing free cash flow guidance for 2016. Constructive on XPO's 2016 progression/long-term opportunity, we view its current trading level as compelling and reiterate our $42 PT."
Shares of XPO Logistics closed at $32.93 yesterday.
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