Knight-Swift Faces Challenged Truckload Market: Analyst Lowers 2023 Price Target

Susquehanna analyst Bascome Majors reiterated a Neutral rating on Knight-Swift Transportation Holdings Inc.KNX, lowering the price target to $51 from $53.

The company reported worse-than-expected Q2 2023 earnings results and cut 2023 guidance. Revenues of $1.55 billion, down 20.8% Y/Y, missed the consensus of $1.60 billion.

The company lowered the outlook for 2023 adjusted EPS to $2.10-$2.30 (from $3.35-$3.55) vs consensus of $2.76.  

The analyst cautions that KNX will bear the brunt of a wide range of outcomes for a deeply challenged truckload carrier in this worse-than-feared truckload market.

Adjusted EPS of $0.49 missed the street estimates of $0.57. Year-to-date, operating cash flow stood at $722.2 million. 

For the quarter, KNX expects a 1,100-1,200bps degradation in consolidated operating margin Y/Y, driven by the TL market, where persistently soft demand has caused volumes and pricing to be under more significant pressure, the analyst notes.

The analyst's current sense is year one dilution from the recently closed USX acquisition will force 2023 KNX earnings to roughly the $2.00 range. 

After the lackluster results, the analyst slashed 2023 EPS by $0.60 (to $2.30) and 2024 by $0.65 (to $3.15). 

Price Action: KNX shares are trading higher by 0.36% to $56.06 on the last check Friday.