XPO Could See More Upside as Shipments Outpace Peers, Says Bank of America

XPO Inc. (NYSE:XPO) shares traded higher after Bank of America Securities raised its price forecast and earnings estimates, citing improving operating trends. • XPO stock is showing exceptional strength. Why are XPO shares rallying? BofA Lifts XPO Forecasts Bank of America Securities analyst Ken Hoexter raised his price forecast on XPO to $230 from $228 and lifted earnings estimates through 2028. The analyst cited market-share gains, stronger pricing, and improving margins across the carrier’s LTL network. Hoexter lifted third-quarter 2026 EPS to $1.59 from $1.57, slightly above the Street estimate of $1.57. He also raised 2026 EPS to $5.48 from $5.45 and 2027 EPS to $6.55 from $6.50. His 2028 EPS estimate increased to $7.90 from $7.80. The analyst also increased revenue forecasts to $9.02 billion for 2026, $9.46 billion for 2027, and $9.91 billion for 2028. Hoexter expects higher fuel-surcharge revenue to provide a modest third-quarter lift, estimating roughly $285 million, up from his prior $265 million forecast. He said XPO’s dense LTL network should help it capture some earnings benefit from higher fuel revenue. Pricing and Share Gains Support Outlook Bank of America sees continued market-share gains, with XPO’s August shipments per day rising 5.2% year over year versus an average 2% decline among public peers. Hoexter said the shipment gains reflect improving service levels, tighter capacity elsewhere in the LTL market and stronger execution. XPO targets a third-quarter operating ratio below 81% after posting 79.9% in the second quarter. Bank of America models 80.4% and maintains its 2026 estimate at 81.5%, implying a 250-basis-point year-over-year improvement. Bank of America values XPO at 35 times estimated 2027 EPS, supporting its $230 price forecast. Read Also: Freight Stocks Plummet as Record-High Diesel Squeezes Profit Margins: 7 Names To Watch XPO Valuation Versus Old Dominion and Saia BofA uses Old Dominion Freight Line Inc (NASDAQ:ODFL) as XPO’s key benchmark, arguing XPO continues to narrow the pricing and margin gap with the industry leader. Hoexter noted that Old Dominion trades at roughly 30.5 times 2027 estimated earnings, below XPO’s target multiple, reflecting Bank of America’s expectation for stronger operating leverage at XPO. Bank of America also compares XPO with Saia Inc (NASDAQ:SAIA), which trades at about 29.5 times 2027 estimated earnings. The analyst believes XPO merits a premium to both peers because of its pricing progress, service improvements, market-share gains, and productivity initiatives. In contrast, Susquehanna analyst Bascome Majors maintained a Neutral rating on XPO and lowered his price forecast to $194 from $225. XPO Expands Freight Network Separately, XPO announced it opened two new service centers in Mesa, Arizona, and Cameron, Missouri, expanding capacity in the Phoenix and Kansas City freight markets. The openings bring XPO’s North American network to 300 service centers. Since 2021, the company has opened nearly 35 new locations and increased network dock-door capacity by 15%. XPO Price Action XPO shares were up 4.76% at $188.28 at the time of publication on Friday, according to Benzinga Pro data. Photo: Shutterstock