XPO, Inc downgraded to Underweight from Equal Weight at Morgan Stanley

Morgan Stanley downgraded XPO, Inc to Underweight from Equal Weight with a price target of $80, up from $75. XPO’s Q4 beat “fans the narrative flame” that has seen the stock almost quadruple in the last nine months, the analyst tells investors in a research note. The firm likes what management is doing by focusing on improving service and leveraging that to accelerate pricing while ensuring that the company has enough capacity to fuel a long runway for growth. However, not all of the earnings growth potential is idiosyncratic and the market’s post-Yellow optimism “may be inflated,” says Morgan Stanley. Against this backdrop, XPO stock is pricing in near-record revenue growth, near-record margin improvement at a multiple that is nearly double peer historical benchmark valuation, “leaving very little room for error,” the firm contends.