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It is time for buyers to maneuver to the sidelines on XPO , in accordance with Morgan Stanley. Analyst Ravi Shanker downgraded shares to equal weight from obese following what he thought of a lackluster quarter for the less-than-truckload (LTL) delivery firm. LTL refers back to the transportation of smaller freights that always do not require the usage of a whole trailer. “The 4Q print was more durable than anticipated and we consider the inventory could possibly be in a ‘penalty field’ for some time, because the market seeks extra proof on execution and traction towards LT targets,” Shanker wrote in a Monday word. Morgan Stanley is the newest agency downgrading the inventory after earnings. Wells Fargo and Jefferies downgraded the logistics agency final week following its fourth-quarter outcomes. XPO posted earnings of 98 cents per share on income of $1.83 billion. Whereas Shanker thinks XPO’s valuation continues to be engaging in opposition to its friends, he minimize his worth goal to $43 from $55. The brand new worth goal nonetheless implies shares can advance one other 22% from Friday’s closing worth of $35.22. XPO shares rose greater than 5% this 12 months, after falling 27.6% in 2022. The analyst mentioned the inventory stays a “present me” story in the intervening time after it spun off RXO in November. RXO is the fourth-largest U.S. truckload dealer. “We wrote in our post-spin word that ‘idiosyncratic enchancment is each a possibility and a danger’ and that ‘ buyers want a brand new purpose to purchase the inventory’ put up spin – the 4Q consequence and convention name seemingly leaves an extended path for buyers to totally get on board regardless of the cycle,” Shanker wrote. The analyst mentioned different transport firms which are overweight-rated and seem extra compelling are ArcBest and TFI Worldwide . Shares are up greater than 43% and 24% this 12 months, respectively. —CNBC’s Michael Bloom contributed to this report.
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