Wall Street analysts positive on C.H. Robinson deal; S&P more cautious

One concern after another was raised by the buy side analysts who follow C. H. Robinson and RXO on the phone call that Monday morning rapidly followed the shocking announcement that C. H. Robinson, the largest broker in the U. S. , was buying RXO, generally considered the 3rd biggest 3PL. What about antitrust concerns?

How will you handle technology integration? What kind of legal “docket” does RXO face? And one by one, those concerns were swatted away. Given that most of the analyst questions included a “congratulations” to C. H. Robinson CEO Dave Bozeman, it seemed clear that Wall Street was sold on the close to $6 billion acquisition.

The shock nature of the deal was best expressed by Tom Wadewitz of UBS on the call. He noted that C. H. Robinson had “talked about being active in acquisitions, but I think this is bigger than expected.” The two C. H.

Robinson executives on the call, Bozeman and CFO Damon Lee, repeatedly said the deal was not done with the legal fallout from the Montgomery vs. Caribe Transport II case in mind.

Still, the term “post Montgomery world” was kicked around during the call, and it represented more of an acknowledgement that the 3PL industry is going to change beyond just protecting itself legally. “I do certainly think in the post-Montgomery world that the flight to quality is important,” Lee said. “So I think that factors into our confidence.”

Shippers who were confident in using C. H. Robinson and RXO separately, Lee said, “are going to be even more confident in our capability as a combined entity. Post-Montgomery, this makes the discussion a lot easier as well.” The end goal numbers are that RXO (NYSE: RXO) is being valued at approximately $5.

8 billion in the deal, and that the combined company will have an enterprise value of more than $25 billion. RXO up on Monday, down on Tuesday The initial reaction on Wall Street to the merger Monday was a sharp increase in the price of RXO stock–not surprising given that at the very least, the cash-only option or cash portion for shareholders is $30.

25 per share–and a decline in the price of C. H. Robinson. At approximately 1:05 p. m. EDT Tuesday, C. H. Robinson (NASDAQ: CHRW) stock was down $6. 63, or 4. 72% to $133. 98. A day earlier, C. H. Robinson was down $17. 11 to $140. 61, a drop of 10. 85%. The Monday increase for RXO did not carry into Tuesday. Also at about 1:05 p. m.

EDT, RXO was down 37 cts, or 1. 29%, to $28. 28. It was closer to flat by the end of the day. One day earlier, RXO finished up $5. 27 to $28. 65, a gain of 22. 54%. The stock price has not reached the cash portion of the deal.

But even if investors right out of the gate may have not been fans of the deal, those sell side analysts with their congratulations told a different story. Analysts see the synergies as doable A focus on the post-announcement reports from investment banks was C. H.

Robinson’s projections that synergies in the deal will be worth $300 million and that the deal would be accretive to earnings within nine months of the deal’s close, which is anticipated in the first half of next year. Longer-term, C. H. Robinson said the merger would be “mid-teens accretive to adjusted EPS in 2028.” In the first half of 2026, C. H.

Robinson reported adjusted EPS of $2. 95, which was up 19. 9% from a year earlier. In a report that it slugged “First Read,” analysts at UBS said that “a backdrop where CHRW has been very good at realizing cost synergies and visibility to stronger truckload volume growth is limited, we believe the deal makes clear strategic sense.” The decline in the C. H.

Robinson price Monday (when the UBS report was published) “provides opportunity, but we also realize it will take time for more visibility to deal integration & other risks.” At Bank of America Merrill Lynch, the transportation research team led by Ken Hoexter made a similar argument: the drop in the C. H. Robinson stock price, for now, makes sense.

But so do the company’s arguments in favor of the deal. Bank of America Merrill Lynch held its buy rating on the stock, but said its Price Objective was cut to $203 from $226 “as we account for equity dilution in the expected deal.” The argument for significant cost savings is solid, the bank said.

“We believe CHRW’s productivity track record sets a credible path to narrowing RXO’s productivity gap and exceeding its $300 mil synergy target,” it said in its report. Ratings agencies check in There was one significant mildly dissenting voice on the strengths of the deal: S&P Global Ratings. While S&P Global (NYSE: SPGI) did not change its rating on C. H.

Robinson–it would not make such a move that quickly–it did shift the outlook on its debt rating to negative. Both S&P Global and Moody’s (NYSE: MCO) by the end of the day Monday had affirmed their current rating on C. H. Robinson, a BBB+ from S&P Global and Baa2 at Moody’s.

Both are investment grade, but the S&P rating is considered higher on an equivalency scale. In the call with analysts, Bozeman said he expects the deal