Citi maintains a "Neutral" rating on C.H. Robinson Worldwide (CHRW) despite a strong Q3 2024 performance, with adjusted EPS of $1.28, surpassing both Citi's estimate of $1.13 and consensus of $1.15. The stock closed at $103.04, down 6.02% on October 31, reflecting high pre-earnings expectations. The Q3 beat was driven by a 230% y/y increase in Global Forwarding operating income, attributed to exogenous events like East Coast labor disruptions. However, Citi cautions that these factors are unlikely to persist, with management warning of a weaker Q4 due to seasonal volume and profit declines.
Citi raised its 2025 and 2026 EPS estimates to $4.95 and $5.35, respectively, and increased the target price to $117, applying a 16x EV/EBITDA multiple. Despite cost-cutting successes, including a 10% y/y headcount reduction, Citi remains cautious about CHRW's ability to sustain growth amid declining truckload volumes and competitive pressures. CEO Dave Bozeman emphasized the company's strategy to "decouple headcount growth from volume growth," setting the stage for future freight cycle improvements.