Wolfe Research has cut its target for Expeditors International of Washington's stock to $134 from $142 and kept an Underperform recommendation on the shares. The firm's move arrives amid continuing deterioration in ocean freight rates and mixed operational metrics reported by Expeditors in the fourth quarter.
Expeditors posted fourth-quarter earnings per share of $1.49, a marginal beat versus the consensus figure of $1.47. Despite the EPS outperformance, valuation metrics and margin trends underscore mounting pressure: the stock trades at a price-to-earnings ratio of 22.43 and, per InvestingPro analysis, appears overvalued relative to its Fair Value.
Top-line dynamics were uneven across business lines. Ocean net revenue fell 11% sequentially and 20% year-over-year as rate deflation weighed on results. Airfreight net revenue moved into negative territory year-over-year. On a volumes basis, airfreight activity increased 6% year-over-year, while ocean volumes declined 6% year-over-year. Pricing trends deteriorated versus the third quarter, with air-freight pricing down 2% year-over-year and ocean pricing plunging 28% year-over-year.
Operating profitability also showed strain. Net operating margins declined by 500 basis points year-over-year to 27%, the lowest level recorded in eight quarters. This deterioration coincided with an 8% year-over-year increase in headcount. Over the trailing twelve months, the company reported a gross profit margin of 13.68%.
In corporate actions, Expeditors disclosed a fresh $3 billion share repurchase authorization, representing roughly 16% of shares outstanding. However, buyback activity in the fourth quarter totaled just $47 million, the smallest quarterly repurchase figure in 15 quarters.
An InvestingPro tip included with the company’s profile notes that management has been an active buyer of shares historically; that commentary is listed among 13 ProTips available to EXPD subscribers along with Pro Research Reports.
On the forecast side, Wolfe Research adjusted its estimates, lifting its 2026 earnings projection by 1% while trimming its 2027 estimate by 6%. After those revisions, Wolfe's outlook implies flat earnings for Expeditors across the next two years. The firm expects continued pressure on ocean results driven by weaker rates and highlights a risk that customs-related strength may peak in 2026.
Additional detail from the company's own reporting reiterated the mixed performance. Expeditors' fourth-quarter 2025 EPS of $1.49 exceeded Stifel’s $1.39 estimate and topped the market expectation of $1.47. Consolidated revenue declined 3% year-over-year, a decrease management attributed primarily to ocean rate compression and reduced container volumes, partly offset by growth in airfreight volume and customs brokerage services.
The company indicated the newly announced $3 billion buyback program will commence after the expiration of the current program in February 2024.
Analyst activity has been varied. BofA Securities upgraded Expeditors from Neutral to Buy, citing potential upside in the Customs Brokerage segment amid tariff complexities and set a price target of $179. Stifel retained a Hold rating while adjusting its price target to $141, reflecting the company’s recent operational performance.
On executive staffing, Expeditors has entered into an employment agreement with Roberto A. Martinez naming him President of Global Products, effective June 1, 2025. The agreement includes provisions for base salary and performance-based incentives.
Taken together, the quarter's results, management actions, and divergent analyst reactions reflect a company navigating rate-driven revenue compression in ocean freight while attempting to return capital to shareholders. Wolfe Research's downgrade underscores the firm’s caution around continued ocean-rate weakness and the uncertainty surrounding the sustainability of customs-related revenue growth.