XPO Plunges Most in Two Years After Cutting Its Profit Forecast

(Bloomberg) -- XPO Logistics Inc. tumbled the most since mid-2016 after the company pared its earnings forecast, stoking fears about weak economic growth amid President Donald Trump’s trade war with China and his threat to shut down the U.S. government.

Earnings before interest, taxes, depreciation and amortization will climb 12 percent to 15 percent next year, the trucking and logistics company said in a securities filing Wednesday. On Nov. 1, Chief Executive Officer Brad Jacobs targeted 15 percent to 18 percent growth in the measure of cash profit.

Wary investors are latching onto any negative news as a reason to dump shares, said Kevin Sterling, an analyst at Seaport Global Holdings. “They lowered expectations, but 12 to 15 percent Ebitda growth is pretty darn good and the stock is down,’’ he said.

The shares fell 9.6 percent to $60.28 at 1:46 p.m. in New York after dropping as much as 13 percent, the most intraday since June 2016. XPO had declined 27 percent this year through Tuesday, while the Standard & Poor’s 500 Index slipped 1.4 percent.

XPO’s slump reflects widespread anxiety over profits, especially for shipping companies, which are bellwethers for the broader economy. FedEx Corp. has plunged 12 percent since last week’s announcement of a management change in its Express operation sparked speculation that the unit would cut a long-term profit target.

Cash Flow

XPO on Wednesday also forecast 2019 free cash flow of $650 million, up only 4 percent from the outlook for this year. The weak guidance is probably because of expected tax payments after the company exhausts tax credits this year from previous losses, Sterling said.

“This is just the market turning skittish,” said Cowen & Co. analyst Jason Seidl. “Before, when the market was bullish, news like this wouldn’t affect it. Now the market is skittish and news is affecting it.”

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