Overview
Benchmark has reaffirmed a Hold rating on RXO, Inc. (NYSE:RXO), saying the freight transportation firm is operating under margin pressure caused by rising truckload spot rates and constrained capacity. The research house noted that RXO's reported fourth-quarter performance largely matched expectations, yet first-quarter guidance disappointed, prompting downward estimate revisions.
Quarterly results and guidance
RXO reported adjusted EBITDA of $17 million for the fourth quarter and total revenue of $1.5 billion. Those figures were generally in line with Benchmark's projections. However, the company's guidance for first-quarter adjusted EBITDA - between $5 million and $12 million - fell short of Benchmark's prior $13 million estimate. That divergence led Benchmark to lower its near-term projections for the company.
Margin and volume details
On the Truck Brokerage side, gross margins were reported at 11.9%, slightly under the 12% to 13% guidance range the company had provided but still above Benchmark's internal estimate. Industrywide dynamics were notable: buyer rates increased sharply from November to December, marking the largest month-to-month gain in 16 years at roughly 15%. At the same time, truckload volumes were down about 12% year-over-year.
Company commentary and actions
RXO highlighted a late-stage brokerage sales pipeline that is more than 50% larger compared with the same period last year. The company said it expects to regain truckload volume outperformance relative to the broader market as early as mid-year. Since its spinoff, RXO has implemented $155 million in cost actions and continues to pursue productivity initiatives designed to support margins and operations.
Analyst community response
Benchmark maintained its Hold rating, noting that RXO's current market valuation already embeds a significant portion of anticipated long-term upside from a truckload recovery. Benchmark's forecasts assume EBITDA improvement beginning in the second half of 2026 and into 2027.
Other firms also weighed in following the quarter. Stifel kept a Hold rating and set a $15.00 price target after the earnings miss. Stifel observed that adjusted EBITDA of $17 million missed its $18.1 million estimate and the Street's $18.5 million expectation. Raymond James reiterated a Market Perform rating, calling out declines in RXO's volume and gross margin performance since the company's 2024 acquisition of Coyote Logistics, and noting these metrics now trail peers and the broader market.
Takeaway
The quarter presents a mixed picture: revenue broadly met expectations while profitability metrics and near-term guidance disappointed. RXO has pointed to a growing brokerage pipeline and has enacted substantial cost measures, but analysts remain cautious given the current margin environment and volume weakness.