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XPO Logistics (NYSE:XPO) was downgraded by analysts at Wells Fargo and Jefferies on Friday, with its price target also cut by both firms.
Wells Fargo analysts downgraded the stock to Equal Weight from Overweight, reducing the firm’s price target on the stock to $40 from $45 per share.
The analysts told investors in a research note that they see 2023 as a transition year for XPO.
“Capital investment is focused on gaining market share, but is bringing tonnage onto the network with a negative price/cost spread, limiting upside to expectations in the near term,” explained the analysts.
They also said 2022 will represent “peak earnings” as the company focuses on market share through the current capital investment cycle.
At Jefferies, analysts cut XPO to Hold from Buy, lowering the firm’s price target on the stock to $40 from $42 per share.
“We believe the stock will be in the penalty box, as investors remain skeptical of XPO’s actions to go after certain volumes at the expense of near-term price,” argued the analysts.
They state that while they understand the intended density improvements from these volumes, “the ultimate benefit of this strategy will not be apparent until the freight market recovers.”
After an almost 14% decline in Thursday’s session, XPO shares are down a further 6% on Friday.
