RXO Faces Margin Pain As Truck Supply Tightens, Analyst Warns

RXO Inc. (NYSE:RXO) is entering the fourth quarter facing mounting margin pressure as tightening truck capacity and rising spot rates squeeze brokerage profitability, pushing expected results below the company's own target range.

Margin Pressure Intensifies As Capacity Tightens

Bank of America Securities struck a more cautious tone on the freight broker, warning that costs are rising faster than demand is recovering. The imbalance is increasing the risk that margin pressure persists longer than previously anticipated.

Analyst Ken Hoexter reiterated a Neutral rating and a $16 price forecast but lowered his fourth-quarter 2025 adjusted EBITDA estimate to $18 million from $25 million, below RXO's $20–$30 million target.

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He expects a sharper-than-anticipated capacity and buy-rate squeeze to weigh on brokerage profitability, with soft demand limiting the near-term benefit from higher spot market activity.

Spot Rates Rise, Demand Remains Soft

Hoexter pointed to supply-side enforcement actions tied to English Language Proficiency requirements, non-domiciled CDLs, and noncompliant ELDs as key drivers of tighter capacity and an above-seasonal lift in spot rates.

Dry van spot pricing excluding fuel recently climbed to $1.73 per mile from $1.65 the prior week, extending several weeks of outsized sequential gains.

While tender rejection rates have improved to roughly 10%, Hoexter said those levels must be sustained before spot volumes materially accelerate.

Forecast Cuts And Valuation Outlook

Reflecting the pressure, Hoexter cut his fourth-quarter brokerage gross margin estimate to 11.9% from 12.5%, below RXO's 12%–13% target, citing higher buy rates and the company's heavy contractual truckload mix.

He also reduced his fourth-quarter 2025 and 2026 LPS/EPS forecasts to a loss of 5 cents and a profit of 15 cents, respectively, while maintaining his 2027 EPS estimate of 45 cents.

Hoexter values RXO at 13.5x 2027E EV/EBITDA, viewing 2027 as a mid-cycle benchmark, with capacity durability, spot recovery, and execution on productivity and technology initiatives as key swing factors.

RXO Price Action: Rxo shares were down 4.10% at $14.04 at the time of publication on Wednesday, according to Benzinga Pro data.

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