XPO enters July with a fresh upgrade in hand, a week of short covering behind it, and Q2 earnings on the calendar — a setup that puts the bull case squarely back in focus.
The most significant move this week came from the Street. Evercore ISI upgraded XPO to Outperform from In-Line on July 1, lifting its target to $232, as the analyst community continues to drift in a bullish direction. That follows a string of target raises from Wells Fargo ($250), BMO ($245), and BofA ($246) in early June, all of which maintained positive ratings. The consensus now sits at 15 buys against just 3 holds, with a mean target of $226.55 — roughly 10% above the current price of $205.29. The forward EPS momentum story is backing the bulls up: the factor score on 12-month forward EPS year-on-year growth ranks in the 90th percentile, and 90-day EPS momentum sits at the 85th. Where the Street is less enthusiastic is valuation — EV/EBITDA of 17.7x and a P/E of 36.8x leave little room for error, and the value pillar in ORTEX's stock score is the weakest at 30.1.
Short positioning has been moving in XPO's favour, though the picture is nuanced. Bears covered aggressively through the second half of June — SI fell 11% over the week to 5.79% of free float, unwinding a build that had pushed the position to roughly 7.6 million shares around June 22. The borrow market has never been under real stress here: availability runs at over 1,200% of short interest, meaning roughly 12 shares are available to borrow for every one currently lent out — an extremely loose lending environment with no squeeze dynamics in play. Cost to borrow remains firmly low at 0.51%, barely above last month's level. Options positioning tells a more cautious story: the put/call ratio of 1.88 is running above its 20-day average of 1.69, sitting about one standard deviation elevated. That's not an extreme reading — the 52-week high on the PCR is 4.02 — but it does suggest investors are carrying more hedges than usual heading into earnings.
The bull case rests on execution. XPO's LTL segment generates 60% of revenue and is the primary driver of the operating ratio improvement story that analysts keep coming back to. Bears flag the usual freight vulnerabilities: economic softness, fuel costs, and the complication of the European business, which the company has flagged as a divestiture candidate. Among close peers, SAIA fell 2.3% on the week while JBHT gained 7.5% — XPO's 3% weekly gain puts it in the stronger half of the group, though ODFL and ARCB both dipped slightly. The ORTEX short score of 46, down from 48.6 a week ago, reflects the recent covering rather than any structural shift.
CEO Mario Harik added 165,000 net shares in the most recent reporting period, taking his disclosed holding to 502,805 shares. The broader insider picture in March included award-and-sell activity from the CFO and COO, which is routine around vesting schedules, but Harik's net addition stands out as a directional signal from the top of the house.
Q2 results are due July 30. The last print in May produced a 5% one-day gain. The print before that — April 30 — went the other way, losing less than 1% on the day but drifting 4.5% lower over the subsequent week. With a fresh upgrade, retreating short interest, and an elevated put/call ratio all in the frame simultaneously, the July 30 release will test whether the operating ratio improvement story can sustain a valuation that already prices in a lot of good news.
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