According to Morgan Stanley, it’s time for investors to move to the sidelines of XPO. Analyst Ravi Shanker downgraded the stock to its equivalent from overweight after what he sees as a lackluster quarter for the lower- tonnage carrier (LTL). LTL refers to the transportation of smaller types of cargo that usually do not require the use of the entire trailer. “The Q4 forecast was tougher than expected and we believe equities could stay in the ‘penalty box’ for some time, as the market searches for more evidence,” Shanker wrote in a note Monday. on performance and traction towards LT goals”. Morgan Stanley is the latest company to downgrade its stock following its earnings report. Wells Fargo and Jefferies downgraded the logistics company last week following fourth-quarter results. XPO posted earnings of 98 cents per share on revenue of $1.83 billion. Although Shanker thinks XPO’s valuation remains attractive relative to its peers, he has lowered his price target to $43 from $55. The new price target still implies that the stock could rally 22% above Friday’s closing price of $35.22. XPO stock is up more than 5% this year, after falling 27.6 percent in 2022. The analyst said the stock remains a “show me” story for now after it splits. from RXO in November. RXO is the fourth largest U.S. truck broker. “We wrote in our post-rotation note that ‘idiosyncratic improvement is both an opportunity and a risk’ and that ‘investors need a new reason to buy shares’ after the spin. — Q4 results and conference calls could leave a longer path for investors to get fully on board regardless of the cycle,” Shanker wrote. Other transportation companies that are overrated and look more attractive are ArcBest and TFI International, the analyst said. Shares are up more than 43% and 24% this year, respectively. —Michael Bloom of CNBC contributed to this report.