Oppenheimer analyst Scott Schneeberger reiterated an Outperform rating on the shares of XPO Inc (NYSE:XPO) and raised the price target from $90 to $100.

XPO's two-year strategic shift toward enhanced customer service has garnered 2023 market share gains, while simultaneously contributing to compelling pricing/yield growth, says the analyst.

XPO was the most active acquirer at Yellow Corp.'s (OTC:YELLQ) late-2023 auction, where it added 28 service centers, including the largest/best positioned, writes the analyst.

Related: Freight Operator XPO Wins Bankruptcy Court Approval To Acquire 28 Yellow Service Centers

Combined with XPO's service improvement/pricing/reduced line-haul outsourcing initiatives, the analyst is incrementally optimistic the company will exceed its more than 600 basis points of 2021-2027 operating ratio improvement ahead of schedule.

The analyst is maintaining a 4Q23E adjusted EBITDA of $243 million, considering XPO's indicated yield growth momentum and increased 2024E adjusted EBITDA to $1.185 billion from $1.1 billion on less conservative yield growth assumptions.

XPO's shift toward expanding its network capacity, improving customer service, enhancing pricing, reducing outsourced line-haul, bolstering technology and improving operational efficiency has been gaining traction, notes the analyst.

The analyst anticipates XPO's valuation will build as it ultimately divests its European Transportation business and more importantly, evolves its logical customer service-focused strategy and enhances the efficiency of its North American LTL business.

Price Action: XPO shares are trading higher by 1.16% at $85.99 on the last check Friday.