Echo's second-quarter report along with management's near-term outlook shows that the company is growing at a slower pace versus the overall market in terms of truckload volume, Wadewitz explained in a research report. Also, during the company's conference call management said it won't see any meaningful truckload volume growth over the next few quarters and it is also unclear if any synergies from the Command acquisition will play out as expected.
"Better execution in the market appears necessary but it is unclear whether the catalyst is people, new technology or perhaps entering a period of less intense competition," Wadewitz added.
Finally, Echo's stock is trading at a P/E multiple of around 33x on the analyst's one year forward EPS estimate. And multiple may be unjustified amid a "more muted revenue growth outlook" and only expectations for a "modest" gross margin improvement. As such, a new $13 price target is based on a 22x P/E multiple on the analyst's new 2018 EPS of $0.60 (down from a previous $1.00 per share estimate).
At last check, shares of Echo Global Logistics were down 16.14 percent at $14.55.
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