UPDATE: KeyBanc Cuts Werner to Hold, Cites Costs, Inconsistent Qtr. Results

Todd Fowler, analyst at KeyBanc Capital Markets, downgraded his rating on Werner Enterprises, Inc.

, from Buy to Hold Tuesday morning. Fowler adjusted his FY13 EPS estimate from $1.33 to $1.15 and his FY14 estimate from $1.55 to $1.30. Not changing though, was Fowler's $27 target price. The KeyBanc analyst's rationale for the downgrade concerns a few factors. Equipment gains in the past year have diminished Werner's gains per unit and total units sold. Furthermore, a revision of the hours of service for its freight business has added cost, as has a tight market for driving talent. Maintenance and equipment costs are also significant challenges. "New dedicated business is ramping slower than expected," Fowler said. Therefore, start-up costs are also stiff, though Fowler expects those to subside in Q4. According to Fowler, management at Werner attributes inconsistent quarterly results to the seasonal undulations of the freight industry. Fowler nearly corroborates this explanation, predicting "near-term weakness" in other freight stocks as well. However, for the reasons enumerated in the previous paragraph, Fowler sees Werner's issues as "company specific," justifying his downgrade. Fowler does see cause for cautious optimism in the "less than ideal freight environment" -- Werner included. The holiday season could help Werner's utilization through Q3 and into Q4. Such a boost could support pricing into 2014, thus Fowler's rating of Hold. Werner's stock is currently trading at $23.12, down 5.28 percent.