On Monday, Jefferies updated its financial outlook on RXO, Inc. (NYSE: RXO), increasing the price target to $30.00 from the previous $25.00 while reiterating a Buy rating on the stock. The revision follows a recent conference call with investors where the firm discussed the company's latest acquisition.
The analyst from Jefferies highlighted several factors supporting the positive stance on the deal. The acquisition is seen as financially attractive, trading at 12 times the anticipated 2023 earnings before interest, taxes, depreciation, and amortization (EBITDA) before considering synergies. After accounting for synergies, the multiple is expected to improve to 9 times. Additionally, the deal is expected to have an immediate and substantial positive impact on RXO's adjusted EBITDA, earnings per share (EPS), and free cash flow (FCF).
The acquisition is also set to significantly bolster RXO's scale within the brokerage sector. Following the announcement of the deal, RXO's stock price saw an increase of 20%, reflecting investor optimism about the company's growth prospects and the financial benefits of the merger.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.