Truist Securities reduced its price objective on Expeditors International of Washington (EXPD) to $140 from $160 and maintained a Hold recommendation, pointing to ongoing margin pressure at the freight forwarder.
For the fourth quarter of fiscal 2025, Expeditors reported adjusted earnings per share of $1.49 on revenue of $2.86 billion. Those results exceeded Truist’s estimates of $1.45 in EPS and $2.82 billion in revenue. The earnings number also topped the consensus EPS estimate of $1.47, though revenue came in below the Street consensus of $2.95 billion.
The company’s share price was trading at $138.83, close to Truist’s revised $140 target. Separately, InvestingPro analysis cited in company commentary suggests Expeditors is trading above its Fair Value assessment, indicating the stock could be overvalued by that measure.
Segment-level performance was mixed. Airfreight Services generated $1.11 billion in revenue, about 2% higher than Truist’s model. Customs Brokerage and Other Services produced $1.14 billion, approximately 7.5% above Truist’s forecasts. By contrast, Ocean Freight and Ocean Services revenue declined roughly 9.8% versus the firm’s model, with the decline attributed to increased capacity and lower volumes.
Profitability metrics showed strain. Reported EBIT margins were 8.8%, 50 basis points below Truist’s estimate of 9.3% and 20 basis points under the Street’s 9.0% expectation. Adjusted EBITDA margin was 9.3%, missing both Truist’s 10.0% projection and the Street’s 9.5% figure. Truist flagged these shortfalls as a driver of its reduced target and reiterated concerns about margin compression, which align with a gross profit margin of 13.68% over the trailing twelve months that InvestingPro identifies as a weakness.
Operational volume data reflected divergent trends across modes. Airfreight tonnage rose 6% year-over-year, supported by technology export volume from North and South Asia. In contrast, ocean volume decreased 6% year-over-year. Average revenue per container fell sharply, down 41% versus the prior year and 17% sequentially, a change attributed to elevated capacity and rate normalization originating in Asia.
On a year-over-year basis, the company recorded a 3% decline in revenues, driven primarily by softer ocean rates and fewer containerized shipments, even as airfreight volumes expanded. The company also announced a new share repurchase authorization allowing buybacks of up to $3 billion of common stock, to commence after the existing program concludes in February 2024.
In corporate developments, Expeditors entered into an employment agreement with Roberto A. Martinez for the role of President, Global Products. His base salary under the agreement is $100,000, subject to review.
Analyst responses to the quarter and company outlook have been varied. Wolfe Research cut its price target to $134 and maintained an Underperform rating, citing pressure on ocean rates. Stifel increased its target to $141 and kept a Hold rating after the company’s earnings beat consensus. Bank of America Securities upgraded the stock from Neutral to Buy and raised its target to $179, citing expected benefits to the Customs Brokerage segment from tariff complexity.
Collectively, these actions underscore a range of views among sell-side firms: some emphasize near-term headwinds in ocean freight and margin erosion, while others see potential upside tied to customs-related services and the company’s capital returns.
Summary
Truist trimmed its target on Expeditors to $140 and reaffirmed a Hold rating, driven by margin weakness and disappointing ocean revenue. The company delivered an EPS beat but missed revenue expectations, reported mixed segment results with airfreight gains and ocean declines, and announced a large share buyback authorization and a key executive appointment.
- Key points
- Truist reduces price target to $140 from $160 while keeping a Hold rating - affects investor sentiment for Expeditors and logistics stocks.
- Q4 2025 adjusted EPS of $1.49 outperformed EPS expectations, but revenue of $2.86 billion lagged consensus, driven by weaker ocean performance.
- Company actions include a new $3 billion share buyback authorization and the hiring of Roberto A. Martinez as President, Global Products - relevant to corporate governance and capital allocation.
- Risks and uncertainties
- Margin compression - lower EBIT and adjusted EBITDA margins highlight profitability risk for Expeditors and the wider freight forwarding and logistics sector.
- Ocean market weakness - falling ocean volumes and sharply lower average revenue per container pose revenue and cash flow risks for carriers and container logistics providers.
- Valuation concerns - InvestingPro’s Fair Value assessment suggests the stock may be overvalued, which could affect investor returns if fundamentals fail to improve.