Knight Transportation Downgraded By Credit Suisse, Doesn't See 'A Compelling Reason To Own The Stock'

Credit Suisse’s Allison M. Landry believes following the 8 percent jump in Knight Transportation KNX shares, there is no longer a compelling reason to own the stock in the near to mid term.

Landry downgraded the rating on the stock from Outperform to Neutral, while lowering the price target from $28 to $26.

Causes For Concern

The analyst explained that the downgrade in the rating was also driven by the softness in truckload supply for a longer than expected period, while spot and contract rates were likely to continue to be depressed in the foreseeable future.

Related Link: Trucking And Rail Stocks React To Low Guidance From Their Peers

Landry also cautioned that the outlook for consumer spending continued to be uncertain due to the upcoming elections in the U.S.

The analyst, however, continues to believes Knight Transportation is best positioned among peers to “take advantage of a recovery in the trucking sector given its superior operating profile, higher relative exposure to the spot market and ability to drive growth via M&A.”

Near-Term Risk

Landry pointed out that a potential Q2 miss could lead to near-term risk to the stock. The 2Q16 EPS estimate has been lowered to below the consensus forecasts.

The FY16, FY17 and FY18 EPS estimates have also been lowered from $1.29 to $1.17, from $1.50 to $1.39 and from $1.71 to $1.58, respectively.