Truckload Stocks Fall Following Analyst's Report
hares of a handful of major truckload firms fell Wednesday after a trucking industry analyst from Bear Stearns & Co. lowered ratings on several trucking stocks, citing a slowing business environment, falling demand and higher costs.
Bear Stearns analyst Edward Wolfe wrote that the truckload sector's worsening fundamentals had dampened demand since mid-May amid a continued downturn in the long-haul trucking segment and a slump in the spot market.
“We see inconsistent demand, decelerating pricing and increased cost pressures accelerating within the [trucking sector.] Besides well publicized driver costs, we see increased concerns from new engine costs as they become a bigger mix of our carriers fleets,” Wolfe wrote in the report.
All those firms are among the Transport Topics 100 listing of North American for-hire carriers.
The report said transportation stocks have lagged the market so far this year, compared with sharp gains in the year-ago period, when strong pricing and tight capacity bolstered operating fundamentals.
"Our sense now is that while regional truckload carriers should continue to outperform the truckload carriers with the longer length of hauls in the near term, the impact of lighter demand and more truck capacity is slowly making its way towards the regional market through the spot market," it said.
As reported on Bloomberg at the close of trading Wednesday, Covenant's shares fell 90 cents to $12.30 a share (-6.8%), J.B. Hunt's slipped $1.09 to $18.79 (-5.5%), Knight's dropped $2.22 to $22.66 (-8.9%), Werner's fell 85 cents to $18.15 (-4.5%), Heartland's fell 98 cents to $18.52 (-5%) and U.S. Xpress Enterprises Inc.'s shares fell 88 cents to $10.67 (-7.6%).
