RXO Stock Soars 20% After $1B Coyote Logistics Buy

RXO shares jump on UPS Coyote acquisition. Analysts boost price targets, but concerns linger over leverage and integration challenges.

RXO Stock Soars 20% After $1B Coyote Logistics Buy

The market has spoken – and it likes what it sees in RXO's big Coyote Logistics grab. Let's break down the Wall Street reaction and what it means for the freight industry.

The Numbers Game

  • RXO stock up more than 20% to $24.81 as of closing Tuesday
  • Stifel boosts price target to $26 from $19
  • Jefferies even more bullish, raising target to $30
"The acquisition will significantly enhance RXO's scale within the logistics industry." - Stifel analysts

Why Investors Are Buzzing

  • Creates 3rd largest brokered transportation provider in North America
  • Deal "immediately and significantly accretive" to earnings and cash flow
  • 80% increase in $1M+ customers expected

But some analysts are waving caution flags.

The Devil in the Details

  • Deal relies on synergies to keep RXO's "highly-leveraged balance sheet" in check
  • Limited visibility into Coyote's business quality
  • Doesn't align with RXO's previous organic growth targets
"The risk/reward balance still warrants a Hold rating on the stock." - Stifel

RXO's Recent Performance

  • Q1 2024 revenue: $913M (down from $1B year-over-year)
  • Adjusted EBITDA within forecast
  • 11% increase in brokerage volume

The Big Picture

  • UPS offloading non-core assets (Remember the UPS Freight sale to TFI?)
  • Freight brokerage consolidation heating up
  • Tech integration will be crucial for realizing synergies

Sources: Investing.com | Investopedia

Great! You’ve successfully signed up.

Welcome back! You've successfully signed in.

You've successfully subscribed to FreightCaviar.

Success! Check your email for magic link to sign-in.

Success! Your billing info has been updated.

Your billing was not updated.