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XPO's $3B purchase of Con-way sends transport names higher

Sep. 10, 2015 7:27 PM ETXPO, Inc. (XPO) StockYELLQ, KNX, WERN, CNW, ODFL, XPO, ULHBy: Carl Surran, SA News Editor3 Comments
  • XPO Logistics' (NYSEMKT:XPO) $3B acquisition of Con-way (NYSE:CNW) sent transportation stocks higher today and generated mostly praise from analysts, with some skepticism of the departure from XPO's asset-light strategy.
  • Oppenheimer's Scott Schneeberger says the deal looks "strategically logical" and further enhances XPO's broad portfolio of logistics services.
  • Credit Suisse's Allison Landry calls the deal a "transformative" expansion of XPO's less-than-truckload shipping capabilities but says the move significantly alters XPO's asset intensity and capex-to-revenue ratio, and adds cyclical risk inherent to LTL shipping as well as questions about who will lead the unit.
  • Stephens' Jack Atkins offers a more bearish view, saying the acquisition is a "major departure" from XPO's previously non-asset or at least asset-light strategy, and increases the company's earnings cyclicality.
  • In today's trade: CNW +33.8%, XPO -11.1%, ODFL +2%, YRCW +7.3%, WERN +1.8%, KNX +1.3%, UACL +2.3% as the Dow Jones Transports rose 0.9%.

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