Morgan Stanley analyst Ravi Shanker maintained a Hold rating on RXO, Inc. (RXO – Research Report) today and set a price target of $23.00.
Ravi Shanker has given his Hold rating due to a combination of factors affecting RXO, Inc. The company is navigating a challenging market environment while integrating its acquisition of Coyote, which has proven to be a complex task. The first quarter results were mixed, with earnings before interest and taxes (EBIT) falling short of expectations, primarily due to difficulties with auto customers. However, the guidance for the second quarter suggests a potential improvement in earnings.
Despite the challenges, RXO’s management has raised the synergy target for the Coyote integration multiple times, indicating potential cost savings and efficiency gains. There have been positive developments in less-than-truckload (LTL) volumes and procurement, which could lead to future growth. Nevertheless, the path to achieving normalized earnings per share remains lengthy. The current risk-reward profile is considered favorable, yet the uncertainties in the macroeconomic environment warrant a cautious approach, justifying the Hold rating.
According to TipRanks, Shanker is an analyst with an average return of -3.2% and a 45.51% success rate. Shanker covers the Industrials sector, focusing on stocks such as Alaska Air, Southwest Airlines, and United Airlines Holdings.