Here's Why XPO Logistics (XPO) Stock Jumped Today

Shares of XPO Logistics, Inc. (NYSE:XPO) climbed 7.14% in late afternoon trading on Monday following a key analyst rating and just days after the company announced its renewal of a major New York City government contract.

Last Thursday, the company made public its updated contract with New York City Emergency Management to remain the organization’s logistics manager for the city’s “Logistics Shelter Support and Commodity Distribution programs.”

XPO’s responsibilities grew under the new contract. The supply chain solutions company will now deal with logistical needs, including mass feeding and other disaster-related requirements, on top of its current duty to coordinate primary shelters.

"We’re thrilled to expand our decade-long support of NYCEM and its critical public safety program,” XPO’s president of supply chain in the Americas and the Asian Pacific, Ashfaque Chowdhury, said in a statement. “We appreciate the trust that NYCEM has placed in us to deliver a fast-response, high-value logistics solution for shelter operations and commodity distribution during city-wide emergencies."

XPO’s stock is currently trading at $58.22 per share, which is just over its 52-week high. The company, which boasts Disney (NYSE:DIS) Pepsi (NYSE:PEP) , Toyota (NYSE:TM) and more as clients, also scored an “A” for Value and a “B” for Growth in our Zacks Style Score system.

The Greenwich, Connecticut and Lyon, France-based company’s new multi-year contract with NYCEM will also see the company manage two of the city’s buildings that house emergency relief supplies.

XPO has only 24-hours to work out all of the logistical requirements needed to coordinate transportation, inventory, staff, and much more, to the roughly 100 emergency shelters located throughout the city’s five boroughs. XPO is expected to deploy its services in the case of severe weather and other possibly harmful situations.

According to NYCEM, NYC has the largest local emergency stockpile program in the U.S., which includes hundreds of thousands of ready-to-eat meals, over one million liters of water, first-aid kits and many more vital emergency supplies.

Analyst Note

According to Streetinsider.com, Deutsche Bank (NYSE:DB) analyst Amit Mehrotra stood by its XPO “Buy” rating and its $75 price target, while also noting that the logistics company could have a 75% upside. The Deutsche analyst pointed out that the growth of online retail in the U.S. and the slow decline of brick-and-mortar stores across the country could lead to a 50% increase in e-commerce growth by 2020.

“We established over one-third of the company’s $15 billion in sales is leveraged to e-commerce (and growing),” Mehrotra noted. “Further, XPO's strong market position and vertical integration is starting to translate to revenue growth- as shippers increasingly look toward one-stop solutions to support investments in e-commerce. We also see scope for valuation uplift as the story evolves from cost take-out to top line growth.”

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