RXO, Inc.: Mid-Q update highlights spot wins, share gains, and above-target GP/load; PO $25

Research evidence excerpt

RXO, Inc.: Mid-Q update highlights spot wins, share gains, and above-target GP/load; PO $25

Price objective basis & risk

C.H. Robinson (CHRW)

Our $226 price objective is based on a 36.0x target multiple of our 2026 EPS estimate,

above its 20-year 17x-27.5x range as earnings scale on AI productivity gains, led by

CHRW's focus on productivity and continued share repurchases. We believe CHRW

benefits with low spot rates at the bottom of the freight environment, and is positioned

to capture profitable share as the spot market inflects. CEO Dave Bozeman has launched

a new operating plan blending LEAN architecture, a rebuilt senior management team,

and accelerating the automation/digitalization of the broker process to accelerate share

gains/volume growth (relative to market), and improve margins.

Downside risks to our price objective are the continued inability to pass along rate

increases faster than capacity cost increases (or decreases for both), which would

negatively impact margins. Also, a prolonged economic downturn, increased fuel

headwinds, increased pricing pressure within the third party logistics industry, changes

in the company's customer base due to consolidation, and changes in relationships with

its truck, ocean, and air carriers could also impact returns, as well as its ability (or

inability) to blend recent acquisitions.

RXO, Inc. (RXO)

Our $25 price objective is based on a 17.0x our 2027E EV/EBITDA multiple, based on it

passing through trough earnings and seeing accelerating growth into the upturn.

Upside risks are a faster than expected inflection in the truck freight cycle, which may

drive a rapid influx of spot-related project volumes for RXO, increased shipper freight

demand, which may lead upside to rates, as well as better-than-expected execution on