XPO Looks 'Increasingly Attractive' As A Takeover Target, Says Jefferies

Jefferies analyst David Kerstens lowered his price target for XPO Logistics to $92 from $120 while maintaining a Buy rating on the shares. The stock closed yesterday at $53.28. XPO is caught in a "perfect storm" with its largest customer downsizing the majority of its business and increasing macro and currency headwinds, Kerstens tells investors in a research note.

However, the stock has fallen 55% over the last six months, underperforming logistics peers by 40%, and now trades at 5.5 times estimated fiscal 2020 enterprise value to EBITDA, implying discounts of 46% to logistics peers and 20% to U.S. trucking peers, says the analyst.

He believes XPO looks "increasingly attractive as a takeover target." As a result, XPO put its acquisition strategy on hold and will partly utilize its $8B acquisition war chest for share buy backs of up to $2.5B, Kerstens points out.


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