BofA Downgrades US Xpress Enterprises Even As It Expands Variant Trucking Segment

While US Xpress Enterprises Inc USX is expanding its Variant truck segment, it is missing out on “fully participating in the strongest truckload market in a generation,” according to BofA Securities.

The US Xpress Enterprises Analyst: Ken Hoexter downgraded the rating for US Xpress Enterprises from Neutral to Underperform, while reducing the price target from $9 to $8.

The US Xpress Enterprises Thesis: The company has gone through several strategy shifts since its IPO in 2018 and now plans to focus on growth for the next three to four years, Hoexter said in the downgrade note.

“To support its growth, it reiterated its $130-$150 million net capex target, indicating $74 million in 4Q, from $56 million in 3Q21,” the analyst wrote. “With thin margins, and minimal free cash flow, USX is increasing leverage,” he added.

Hoexter further mentioned that US Xpress Enterprises faces “increased risk from additional leverage,” which could offset accelerated growth.” He reduced the earnings estimates for 2021 and 2022 from 50 cents per share to 38 cents per share and from 95 cents per share to 70 cents per share, respectively.

USX Price Action: Shares of US Xpress Enterprises had declined by 15.43% to $7.87 at the time of publication Friday.

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