Market Overview

Longbow Cuts ArcBest, Old Dominion Estimates On Low LTL Demand In May

Share:
Longbow Cuts ArcBest, Old Dominion Estimates On Low LTL Demand In May

Longbow has slashed its second quarter earnings forecast for ArcBest Corp (NASDAQ: ARCB) and Old Dominion Freight Line (NASDAQ: ODFL) after its Less than Truckload (LTL) carrier contacts indicated May demand ran below their expectations as tonnage trends further decelerated during the second quarter.

Longbow cut its second quarter EPS view of ArcBest by $0.02 to $0.43 and Old Dominion by $0.01 to $0.96. The consensus estimate calls for earnings of $0.48 a share and $0.96 a share for ArcBest and Old Dominion, respectively.

The brokerage also cut its 2016 EPS estimate of ArcBest by $0.03 to $1.27 and Old Dominion by $0.01 to $3.57. The consensus estimate calls for earnings of $1.19 a share and $3.60 a share for ArcBest and Old Dominion, respectively.

However, Longbow's 2017 EPS estimates for ARCB and ODFL remain unchanged at $1.85 and $4.10, while consensus calls for $1.74 and $4.13, respectively.

"Our most recent checks with LTL carriers – in which market demand was modestly below expectations albeit pricing was relatively stable – leave us somewhat less optimistic on 2016 market fundamentals," analyst Matthew Brooklier wrote in a note.

The analyst highlighted that more than two thirds (70 percent) of its survey participants indicated that demand during May was generally below their expectations –which translated into a slightly greater rate of average tonnage decline at -3.0 percent y/y in May versus -2.4 percent during April.

"While demand remained pressured thus far in 2Q, net of fuel yield growth at 3.3% during May was somewhat stable, and carrier expectations for all in yield growth during 2016 at 2.9% was roughly in line with our last round of checks," Brooklier noted.

In addition, checks indicated that the Freight division of FedEx Corporation (NYSE: FDX) has continued with heavy discounting targeting prospective customers, resulting in some additional share shift.

Brooklier also highlighted that checks showed certain customers are delaying shipments at a greater rate to consolidate loads to full Truckload due to more attractive pricing. This is a negative read-thru for Heartland Express, Inc. (NASDAQ: HTLD), Knight Transportation (NYSE: KNX), Swift Transportation Co (NYSE: SWFT) and Werner Enterprises, Inc. (NASDAQ: WERN).

Brooklier reiterated his Buy rating and $70 price target on Old Dominion, while ArcBest remains Neutral rated at this time.

At the time of writing, shares of ArcBest fell 1.04 percent to $17.05 and Old Dominion dropped 1.15 percent to $63.61.

Latest Ratings for ARCB

DateFirmActionFromTo
Jan 2021Morgan StanleyMaintainsOverweight
Jan 2021Stephens & Co.UpgradesEqual-WeightOverweight
Dec 2020Morgan StanleyUpgradesEqual-WeightOverweight

View More Analyst Ratings for ARCB
View the Latest Analyst Ratings

 

Related Articles (ODFL + ARCB)

View Comments and Join the Discussion!

Posted-In: LongbowAnalyst Color News Price Target Reiteration Analyst Ratings

Latest Ratings

StockFirmActionPT
MRTXHC Wainwright & Co.Maintains257.0
NVDATruist SecuritiesMaintains672.0
NVDASusquehannaMaintains625.0
BLKBMO CapitalMaintains715.0
BLKDeutsche BankMaintains838.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com