UPDATE: Bank of America Maintains Forward Air Corp. at Underperform, Expands Into Pharmaceutical Logistics

In a report published Tuesday, Bank of America maintained Forward Air Corp. FWRD at Underperform and raises price objective from $36 to $39. Bank of America reported that, “Forward Air acquired Total Quality, Inc., a provider of temperature-controlled truck services and security to the pharmaceutical and life science industries, for $66 million. The acquisition marks Forward Air's first entry into healthcare logistics, and is its first acquisition in 5 years, after acquiring 5 companies between 2005 and 2008. We believe Forward Air continues to look for high-return models to use its building cash flow, with Total Quality fitting a portion of that target (it is more asset intensive than Forward's core, about half owned), although it aims to replace assets with its asset lighter owner-operator model. It has struggled to identify quality companies with attractive margins, low asset intensity, and an end market that does not conflict with its existing customers.” Forward Air Corp's shares closed at $37.95 on Monday.
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