KeyBanc Starts XPO Logistics (XPO) at Hold

KeyBanc initiates coverage on XPO Logistics (NYSE: XPO) with a Hold.

The firm comments, "In our view, XPO represents an intriguing growth story with an ambitious strategy focused on consolidating the highly fragmented U.S. truck brokerage industry through a combination of acquisitions and organic expansion. Based on this strategy, XPO is targeting gross revenue of $4 billion-$6 billion by 2016, compared to our pro forma estimate of $500 million in 2012 (includes recent acquisitions), potentially making it one of the largest transportation providers in the United States. Further, we believe Chairman and CEO Brad Jacobs's tenure and prior success with acquisitions and roll-ups is compelling, and combined with an experienced management team of transportation professionals, provides the required expertise to execute this plan, while secular growth dynamics in truck brokerage support organic growth longer term. However, as reflected in our estimates, we expect earnings to be constrained over the intermediate term as strategic investments are made, while low growth in freight volumes combined with relatively balanced capacity hinder near-term brokerage dynamics. Considering these factors, as well as uncertainty inherent in its longer-term financial targets and our selective outlook industry wide, we believe a HOLD rating is most appropriate pending increased evidence of execution on acquisition plans and/or a more favorable brokerage market."

For an analyst ratings summary and ratings history on XPO Logistics click here. For more ratings news on XPO Logistics click here.

Shares of XPO Logistics closed at $16.02 yesterday.

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