Goldman Turns Bullish On Saia, Sees Room For Shipping Efficiency, Profit Growth

Goldman Sachs analyst Jordan Alliger upgraded Saia, Inc. SAIA from Neutral to Buy and raised the price forecast from $387 to $410.

The analyst believes that the company can continue to gain market share and grow its tonnage at a faster pace than overall industry trends.

Alliger cites regional cross-selling opportunities with current and new customers and potentially increased penetration of national accounts by offering a wider service area through its recent network expansion as growth catalysts.

Further, increased Less-Than-Truckload (LTL) volume growth should lead to better capacity utilization, which in turn reduces cost per shipment and significantly accelerates margins, adds the analyst.

Meanwhile, the analyst notes that the company faces a challenge in achieving the necessary density to offset terminal expansion costs amid a freight recession.

This, combined with persistent weakness in legacy SAIA volumes due to soft LTL industry fundamentals, has recently resulted in margin underperformance, adds the analyst.

Alliger says that this situation could lead to additional quarterly EPS volatility until industry volumes improve, which would enhance network productivity and efficiency.

The analyst believes that this will put SAIA back on a path toward significant incremental margin opportunities and above-average long-term industry EPS growth rates despite possible near-term margin pressure.

Overall, Alliger thinks that it is feasible for SAIA to move into the low-80% operating ratio (OR) range and eventually below 80%, compared to an OR of over 90% prior to COVID-19 and in the first quarter of 2025.

Price Action: SAIA shares are down 1.5% at $260.22 at the last check on Monday.

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