Morgan Stanley Reiterates Underweight Rating on Knight Transportation

Morgan Stanley has published a report on Knight Transportation KNX reiterating the Underweight rating. In the report, Morgan Stanley wrote, "In our preview, we highlighted that KNX's 2Q11 results would benefit from 1Q11 contract renewals and some recovery in utilization following poor 1Q weather. We cautioned though that peaky 2Q trends and rising cost pressures in 2H would dampen guidance – a view which played out (see Truck 2Q Preview: Looking Like Peak Qtr. For Pricing 7/11/11). Specifically, mgmt highlighted: (1) tight driver availability as an industry overhang, indicating driver pay would likely rise; (2) uncertainty in meeting 3.5-4% 2011 price growth targets; and (3) 3Q11 EPS guidance of $0.19-$0.22 vs. cons. of $0.24. KNX is optimistic on peak shipping season, but this optimism is already embedded in guidance and, thus, dampens this data point's impact." Morgan Stanley rated Knight Transportation an Underweight with no price target given. Knight Transporation closed Wednesday at $16.00.