RXO Inc (RXO) Stock Forecast & Price Target

RXO Inc has demonstrated positive financial performance, with a segment gross margin of 21.0%, reflecting a year-over-year increase of 40 basis points, signaling effective cost management and operational efficiency. The successful integration of Coyote has significantly enhanced RXO's access to freight and its carrier network, which is anticipated to foster improved cost performance in the future. Additionally, strong growth in the Final Mile segment, characterized by a 24% year-over-year increase in the number of stops, highlights the company's ability to expand its market share and solidify customer relationships amidst competitive pressures.

RXO Inc reported a revenue of $1.067 billion, which fell short of expectations primarily due to slower volume growth, as pro forma volumes declined by 1% year-over-year, with a notable 8% drop in truckload (TL) shipments accounting for approximately 75% of total volumes. The company is facing challenging market conditions, particularly in the automotive sector, where full truckload (FTL) volumes continue to decline, leading to projections of total volume decreasing by low to mid-single digits year-over-year for the second quarter of 2025. Furthermore, drastic reductions in EPS estimates for 2025 and 2026, from $0.32 and $0.70 to $0.20 and $0.55 respectively, further highlight RXO's weak financial outlook and increasing pressures on profitability.