UPDATE: FBR Upgrades XPO Logistics Based on Solid Gains and Margin Improvements

In a report published Monday, FBR Capital Markets analyst John Mims upgraded XPO Logistics, Inc. (NYSE: XPO) from Market Perform to Outperform and raised the 12-month PT from $18 to $30.

Management at XPO Logistics confirmed their confidence on delivering a solid EBITDA in 4Q13 and set a 2017 EBITDA target of $300M. FMR commented, "we believe investors have a rare opportunity to get into this name now, while it is relatively under the radar and not in the news. The stock will likely move sideways until the next catalyst, which will likely be either (1) execution on the firm's guidance to report positive EBITDA in 4Q13, or (2) announcement of another meaningful acquisition." Acquisition of Turbo, Continental, and 3PD have also added revenue and operation capabilities. Mims noted that his bullish view is a direct result from efficiency gains and margin improvements driving EBITDA growth over revenue. The analyst reported that "we believe the stock is poised for “phase two” of its appreciation trajectory."

XPO Logistics YoY freight brokerage margins were reported at 220bps in 2Q13 to 13.2%, with registered total gross reveneue growth of 588% YoY. FBR's new $30 PT is based on 9.5x 2014 EBIDTA.

XPO closed at $20.39 on Friday and is currently +1.58%.