This trucking stock has doubled in 2026. BMO says it has more room to run

BMO initiated coverage of RXO with an Outperform rating and a $35 price target, implying 29% upside from Monday’s close. The bank cited operating leverage from a tightening truckload market, projecting peak adjusted EBITDA of ~$600M by end-2028 vs. a $292M consensus (more than double). With brokerage volumes up ~80% YTD and productivity up ~40% on a two-year stack, shares have already gained 114% in 2026 as investors look ahead to early-August Q2 earnings.

Analysis

RXO looks like a classic leveraged beneficiary of a tightening truckload cycle, but the market is now pricing not just cyclical improvement, but a multi-year earnings power step-up. The key mechanism is operating leverage: when spot pricing and utilization improve, a brokerage platform with scale can translate incremental gross profit into disproportionately higher EBITDA, so the real upside is in margin expansion rather than volume alone. That said, with the stock already having rerated sharply, the near-term asymmetry is less about another squeeze in the next few weeks and more about whether management can prove this is a durable earnings reset in August.

Second-order winners are the asset-light intermediaries with cleaner cost structures and the carriers that can hold capacity discipline; losers are freight-intensive shippers that cannot reprice quickly, especially large retailers and consumer goods names with thin gross margins. TGT is a reasonable proxy for that pressure if truckload rates keep firming, because transport inflation tends to show up first in inbound logistics and only later in shelf prices. Conversely, the biggest competitive risk to RXO is not demand weakness, but capacity re-entry: if pricing improves enough to attract idle trucks back into the market, the brokerage spread can normalize fast and invalidate the “peak EBITDA by 2028” narrative.

The contrarian view is that consensus may be underestimating how much of the good news is already embedded after the stock’s run. The market is likely giving credit for cyclical tightening, but not yet proving that productivity gains and scale can hold when the cycle rolls over; if load volumes decelerate or spot rates flatten over the next 1-3 months, the multiple can compress quickly. Over 6-18 months, the true bull case is M&A optionality funded by free cash flow, but that only works if RXO’s execution remains pristine through a softer freight tape.

Key Decisions for Investors

• Long RXO into the early-August print, but prefer a defined-risk structure (bull call spread) rather than outright stock given the year-to-date move; thesis is another leg of EBITDA revisions, not multiple expansion. Falsify if truckload pricing rolls over before the print.
• Pair trade: long RXO / short CHRW for 1-3 months to isolate higher operating leverage to a tight truckload market; expect RXO to outperform if brokerage margins keep widening, but cut the pair if CHRW reaccelerates faster than expected.
• Consider a tactical short or underweight in TGT as a freight-cost-sensitive hedge if truckload rates remain elevated for another quarter; this works best if RXO upside is driven by price rather than demand volume.
• Set a watch item on DAT spot rates, tender rejections, and Cass Freight data over the next 4-8 weeks; if those indicators soften, trim RXO ahead of earnings because the market will de-rate the 2028 EBITDA story quickly.
• If RXO gaps higher into the print, sell upside into strength rather than chase; the setup is better for trading the earnings event than for building a large strategic position at current levels.