Argus Expects Old Dominion To Ride On Strong Fundamentals, Spillover Effect

Old Dominion Freight Line ODFL notched a bullish initiation from Argus Wednesday, with an analyst naming three key reasons for the positive stance. 

The Analyst 

Argus analyst John Staszak initiated coverage of Old Dominion with a Buy rating and $175 price target.

The Thesis

Staszak’s rating is one of the most bullish on Wall Street. The average analyst price target prior to his initiation was $147, according to TipRanks. 

The analyst sees Old Dominion as benefiting from three key factors:

• The freight company has a 99-percent on-time delivery rate, which drives customer loyalty and market share growth.
• Fundamentals for the less-than-truckload business are strong. The segment accounts for 98 percent of Old Dominion’s total revenue.
• Pressure from tight capacity in the full truckload segment has created a “spillover effect” which will benefit Old Dominion as freight shifts to less-than-truckload transport, Staszak said. 

The analyst said he expects the company to report high-teens revenue growth this year that's "well above the 4-percent average growth for peers ArcBest Corp ARCB, FedEx Corporation FDX Freight and YRC Worldwide Inc YRCW.

Price Action

Old Dominion shareswere down 1.09 percent at $146.66 at the time of publication Wednesday.

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