Market News

XPO Logistics Hives Off Intermodal Business for $710 Million

Freight transportation company XPO Logistics, Inc. (NYSE: XPO) recently revealed the sale of its North American intermodal business to STG Logistics for an all-cash deal of $710 million. The deal is expected to close in the fourth quarter of 2022.

Following the news, shares of the company rose 1.1% on Friday. The stock, however, pared its gains slightly to close at $76.97 in the extended trading session.

Details of the Deal

XPO Logistics’s intermodal unit is a part of the company’s Brokerage and Other Services segment. Notably, the unit generated revenues of about $1.2 billion in 2021.

The divested unit provides rail brokerage and drayage services spanning across 48 locations and has about 700 employees on its payroll.

Management Commentary

The CEO of XPO Logistics, Brad Jacobs, said, “This divestiture simplifies our business model and moves our capital structure closer to investment-grade — two priorities in our strategic plan to unlock significantly more value for our stakeholders. We’ve completed a key step in preparing for our planned spin-off, when we’ll separate XPO into two publicly traded leaders in less-than-truckload transportation and tech-enabled brokered transportation services.”

Stock Rating

Recently, Bank of America Securities analyst Ken Hoexter upgraded the stock to a Buy from Hold with a price target of $96, which implies upside potential of 24.7% from current levels.

According to the analyst, the impending spin-off of its truck brokerage services “will be one of the most exciting pure plays in the sector.”

Consensus among analysts is a Strong Buy based on 13 unanimous Buys. The XPO average price target of $99.27 implies upside potential of 28.9% from current levels. Shares have gained 9% over the past year.

Download the TipRanks mobile app now

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Read full Disclaimer & Disclosure

Related News:
SmartRent Shares Drop 10% on Mixed Q4 Results & Muted FY22 Outlook
Philip Morris Jumps 1.5% on Plans to Exit Russia
FactSet Shares Dip Despite Q2 Beat & Raised FY22 Outlook

Tired of arriving late to the Big Returns Party?​
Most investors don’t have major gainers like TSLA or NVDA on their radar from the start.
The profusion of opinions on social media and financial blogs makes it impossible to distinguish between real growth potential and pure hype.
​​For the past decade, we have developed and perfected technology designed to help private investors, just like you, find the best opportunities, with the greatest upside potential, in any financial climate.​
Learn More