XPO Revives $4B+ Sale Of European Supply Chain Business- Report

XPO Logistics is resuming the sale of its European supply chain business, according to a report from Bloomberg. The process had previously been paused due to the pandemic.

The proceeds from the sale of the European supply chain business are estimated between $4- $4.5 billion. At the beginning of this year, XPO Logistics retained advisors to review strategic options which included the potential sale or spinoffs of the business units in North America and Europe. 

Citing people familiar with the matter, Bloomberg stated that XPO Logistics (XPO) had reached out to potential private equity and strategic buyers to try and sell the unit. Bloomberg also mentioned that no final decisions have been made and the logistics company could still decide to retain the business.

XPO is one of the world’s largest freight brokerage providers and a top trucking group in Europe, where it holds a strong position in the e-commerce industry. However, pandemic-led weakness caused a 17.4% decline in the company’s 2Q revenue to $3.5 billion and an adjusted loss per share of $0.63 compared to adjusted EPS of $1.28 in 2019’s 2Q. (See XPO stock analysis on TipRanks)

Nonetheless, the Street has a bullish outlook on the stock. The Strong Buy consensus is based on 11 Buys, 2 Holds and no Sells. With shares up nearly 8.2% year-to-date, the average analyst price target of $95.54 implies a further upside potential of about 10.8% from current levels.

On Sept. 23, Wells Fargo analyst Allison Poliniak initiated coverage of XPO with a Buy rating and a price target of $98. The analyst stated that the shares in the trucking and logistics sector have fared well despite a challenging economy. She added that the valuations currently reflect short term optimism with regard to efficiency gains made by companies in the sector.

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