(By Mani) XPO Logistics, Inc. (NYSE: XPO) is set to become a leading freight brokerage company within the next few years as it is able to communicate and demonstrate progress toward its strategy of becoming a leading freight brokerage.
XPO Logistics is a North American based provider of outsourced transportation logistics services. XPO's process for aggressively recruiting/hiring/training appears well honed, while its rapid and intuitive interface should be a key differentiator in providing immediate/actionable pricing and capacity information.
"We were impressed with XPO's recruiting and training process, its rapid operational progression, and particularly with its implementation of a robust and intuitive software platform that should help differentiate it as it aggressively grows its presence within the asset light, third-party logistics industry," Oppenheimer analyst Scott Schneeberger wrote in a note to clients.
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XPO has exceeded its highest profile 2012 objective of acquiring $250 million of annualized revenue prior to the year-end, driven by its recent Turbo Logistics and BirdDog Logistics acquisitions. Moreover, XPO is well positioned to attract talent continuously and execute acquisitions at attractive prices in a sluggish economy.
"Near term, we are incrementally confident XPO will achieve its targeted run rate of $500 million of annualized gross revenue by 12/31/2012," the analyst wrote.
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Meanwhile, the potential for incremental acquisitions by year-end bodes well for the company as its pipeline targets contemplate 2012 transactions ahead of possible 2013 capital gains taxation changes.
Though some investors may currently be cautious on the transportation space given economic uncertainty, the environment is favorable for XPO's planned, aggressive ramp at this juncture in its life cycle. XPO is targeting to become a top three competitor over the coming five years in the highly fragmented $40 billion freight/truck brokerage market.
"We expect XPO, via cold starts and an aggressive acquisition plan, to possess a dynamic organic (secular growth via customers outsourcing logistics) and acquisitive growth story," Schneeberger said.
XPO could acquire brokerage targets, who'll benefit via increased size/scale given XPO's capital capability, formidable/experienced leadership team, and CEO's proven record of enterprise building.
"We remain drawn to its balanced strategy of acquisitions and cold starts, and are encouraged by its staffing and operational progress," Schneeberger added.