RXO, Inc. has been rated as a hold following a disappointing performance in Q1, where earnings fell short of expectations. However, the company is witnessing improvements in contract rates and spot freight volumes, which are beginning to support a sequential recovery in margins. For the second quarter, RXO has issued guidance for earnings before interest, taxes, depreciation, and amortization (EBITDA) between $27 million and $37 million, indicating a positive outlook. Despite these improvements, the current valuation of RXO appears to have already factored in a significant recovery. Analysts note that for RXO to meet normalized earnings per share (EPS) expectations, it will need to demonstrate sustained volume and earnings growth that surpass current market forecasts. Demand in the freight market remains soft, which presents a challenge for RXO as it seeks to build real momentum in earnings driven by increased volume. The company's ability to achieve these targets will be crucial for its future performance and investor confidence.