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UBS Upgrades Swift Transportation To Buy Following 'Favorable' Q3 Performance

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UBS Upgrades Swift Transportation To Buy Following 'Favorable' Q3 Performance

Swift Transportation Co (NYSE: SWFT) reported robust Q3 results on Monday, with the EPS ahead of the consensus and the estimate.

UBS’ Thomas Wadewitz upgraded the rating on the company from Neutral to Buy, while raising the price target from $22 to $24.

Robust Q3

“Swift’s 3Q performance boosts our confidence in their ability to execute amid a weak TL (truckload) market and it supports a narrowing of the wide P/E gap versus the TL group,” Wadewitz mentioned.

The company reported its Q3 EPS at $0.34, ahead of the consensus of $0.32 and the estimate of $0.30, benefiting from one-off items and representing EPS growth of 9 percent, in contrast to the declining EPS reported by other TL companies.

Related Link: 5 Stocks Moving In Monday's After-Hours Session

Swift Transportation also meaningfully reduced its capex guidance for 2016 from a midpoint of $185 million to $130 million, while lowering its TL fleet size and focusing on cost cuts and fleet utilization.

Fleet Growth

“Swift’s fleet growth has been focused on the Dedicated segment, which is best protected from the current weakness in the TL market. We believe these strategies have supported solid EPS performance,” the analyst stated.

Wadewitz believes TL stock has been well supported through 2016 due to expectations of an eventual capacity reduction due to the required implementation of ELDs by the end of 2017, which is likely to significantly reduce capacity.

The analyst added, “[S]ignificant turn in pricing is likely in either later 2017 or 2018, which should support strong EPS growth for SWFT.”

At last check in Tuesday's pre-market session, Swift was up 5.77 percent at $21.45.

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Latest Ratings for SWFT

DateFirmActionFromTo
Apr 2017Raymond JamesDowngradesStrong BuyMarket Perform
Mar 2017BarclaysDowngradesOverweightEqual-Weight
Mar 2017Longbow ResearchUpgradesNeutralBuy

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