- Morgan Stanley calls XPO Logistics' (XPO +0.3%) EBITDA guide of 24% to 29% growth the best in its Freight Transportation coverage universe.
- The firm thinks XPO's free cash flow guidance should also eliminate bear concerns that the FCF growth is unsustainable.
- "The fact that FCF has continued to grow between 2016 and 2021 despite going through two recessions (which would pressure earnings and factoring) and two cycle peaks (which would pressure working capital and capex) speaks to the resilience of XPO's FCF."
- MS thinks XPO is set to return to its growth leadership in 2021, but warns the stock is likely to remain range bound until the split later this year when the market can decide if the sum of the parts in indeed greater than the whole.
- XPO Logistics rallied last week after strong Q4 results.