RXO Inc (RXO) Stock Forecast & Price Target

RXO Inc. has demonstrated resilience and growth potential in its truck brokerage business, achieving a year-over-year stabilization in TL revenue per load and early signs of increased contract rates, particularly in January, which boosts management's market confidence. The successful integration of Coyote has accelerated the realization of cost synergies by $10 million, enhancing operational efficiency, while the company's gross margin improved to 21.1%, affirming its stability in challenging market conditions. Moreover, RXO's Last Mile segment shows promising growth, with a 15% increase in the number of stops year-over-year, reflecting its competitive advantage and ability to capture market share in the expanding big and bulky sector.

The analysis indicates a negative outlook for RXO Inc. due to a pro forma volume decline of 6% year-over-year, coupled with unit gross profits falling short of expectations. Additionally, the gross margin within the segment dropped to 13.2%, 30 basis points lower than anticipated, with concerns about continued pressure on gross margins stemming from changing customer mixes, particularly affecting the truck brokerage business. Finally, anticipated seasonal weaknesses in the first quarter, alongside overrated earnings expectations from analysts, have led to downward revisions in the EBITDA and EPS estimates for both the fourth quarter and fiscal year 2025, establishing a pessimistic trajectory for future performance.