Bankrupt Yellow Corp's Freight Flowing In For Saia, Analyst Sees Market Share Gains

Benchmark analyst Christopher Kuhn reiterated the Buy rating on Saia, Inc SAIA, raising the price target to $475 from $450.

The analyst raised the price target and earnings estimates, given Saia's third-quarter operating data are higher than expectations. 

Operating data for 3Q showed accelerating less-than-truckload (LTL) shipments per workday, which were offset by lower weight, resulting in tonnage volume growth that was positive for the first time in 10 months and is outpacing peers, the analyst writes.

Saia reported LTL tonnage per workday of +3.4% in July and +6.8% in August, which has once again outpaced Old Dominion Freight Line, Inc.'s ODFL tonnage, which declined 11.1% in July and -6% in August.

Saia's July tons per day were driven by +6% shipments per day and a -2.4% decrease in weight per shipment, Kuhn notes.

The increase in tons is due to Yellow Corporation's freight flowing into Saia's network. 

Kuhn's call back with management indicated that there has been no change in underlying demand, but the company is confident it can retain the volume from Yellow it has taken on.

The analyst continues to believe that 2023 operating results have so far showcased the success of management's long-term strategy, which has allowed it to take a share. 

Based on the above, the analyst increased 3Q estimate to $3.42 from $3.25 and raised 2023 and 2024 EPS estimates to $12.97 and $15.61 from $12.55 and $14.27, respectively.

Price Action: SAIA shares are trading higher by 1.79% to $393.68 on the last check Wednesday.