Morgan Stanley Upgrades RXO, Inc. (RXO) to Overweight, 'Key Inflection Coming in 2026'

Morgan Stanley analyst Ravi Shanker upgraded RXO, Inc. (NYSE: RXO) from Equalweight to Overweight with a price target of $19.00.

The analyst comments "We are upgrading RXO from EW to OW. Our PT remains $19, which implies ~65% upside to their stock price after the ~35% selloff post-earnings last week. See our thoughts on the print here. The 4Q guide was undoubtedly disappointing pointing to near breakeven EPS, but 4Q guides have been weak across the space (average 11.5% downgrade) reflecting tough demand conditions to end the year. However, we remain confident that normalized EPS over time is at least $1 here, implying a ~ $18-20 fair value at a 18-20x normalized PE multiple (see more here). The fact that RXO was an $18+ stock three weeks ago is a sign that once the street is convinced that we are seeing some signs of market improvement, the stock should snap back as well, even if the post-Coyote $30+ highs will need evidence of $1.50+ normalized EPS over time. We also believe that RXO can be amongst the leaders in the deployment of AI in the brokerage space and that this will not be a winner-take-all space as the market is currently pricing into brokerage stocks (especially CHRW)."

For an analyst ratings summary and ratings history on RXO, Inc. click here. For more ratings news on RXO, Inc. click here.

Shares of RXO, Inc. closed at $11.52 yesterday.

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