XPO Logistics (XPO) Stock Forecast & Price Target

XPO has demonstrated a solid financial performance in its less-than-truckload (LTL) segment, with adjusted EBITDA reaching $246 million, reflecting a year-on-year increase of 5.6%, while revenue per shipment, excluding fuel, rose by 5.8% to $325.62. The company's strong pricing power is evidenced by a 7.8% year-on-year increase in pricing ex-fuel and a 6.3% gain in LTL yield, indicating robust customer demand for premium services, which currently account for 11% of revenue and are expected to increase to 15% over the coming years. Furthermore, XPO's adjusted LTL operating ratio improved by 30 basis points year-on-year to 86.2%, positioning it as the only public LTL carrier to achieve operational efficiency improvements in 2024, further supporting a positive outlook on the stock.

XPO's stock outlook is negatively impacted by a significant year-over-year decline in tonnage and shipments, with January experiencing an 8.5% drop attributed partially to weather disruptions, and expectations for continued declines in the first quarter. The company's LTL segment, which constitutes a greater EBITDA contribution proportionately than the 60% of total revenue estimated, is facing headwinds as shipments per day fell by 4.4%, coupled with decreases in weight per shipment. Additionally, the reliance on high growth expectations for valuation may not align with current performance trends, especially given the downturn in fuel surcharge revenue, which declined by 22.6% year-over-year.