BofA Upgrades 5 Trucking Stocks On Tight Capacity And Improving Economy

Economists are expecting the U.S. economy to start ramping back up in the first half of 2020, and that rebound is good news for the trucking industry moving forward.

The Analyst: On Thursday, Bank of America analyst Ken Hoexter issued the following upgrades to trucking stocks:

• J B Hunt Transport Services Inc JBHT upgraded from Neutral to Buy, price target raised from $151 to $171.
• Knight-Swift Transportation Holdings Inc KNX upgraded from Neutral to Buy, price target raised from $46 to $52.
• Schneider National Inc SNDR upgraded from Neutral to Buy, price target raised from $24 to $28.
• US Xpress Enterprises Inc USX upgraded from Neutral to Buy, price target raised from $7.50 to $12.
• Werner Enterprises, Inc. WERN upgraded from Neutral to Buy, price target raised from $44 to $52.

Related Link: Why 2 Spirit Airlines Analysts Are No Longer Bullish After Q4 Results

The Thesis: In the upgrade note, Hoexter said he is once again bullish on trucking stocks following a November downgrade due to a sharp uptick in capacity. On Thursday, Hoexter said that increase in capacity is now factored into analyst outlooks for trucking stocks and has also been offset by driver shortages and an aging truck fleet.

“We believe truckload carriers are positioned to benefit from the cyclical forces of tight capacity and improving economic conditions, which lifted multiples of their more richly valued transport peers, the Rails to low-20s and LTLs to 30x+ forward earnings,” he said in the upgrade note.

Hoexter said trucking investors should benefit from a perfect storm of inventory replenishment and elevated demand through the summer of 2021.

Benzinga’s Take: Bank of America economists recently raised their 2021 and 2021 U.S. GDP growth estimates to 6.5% and 5%, respectively. In a booming U.S. economy, the trucking business is well-positioned to capitalize.

(Photo by Dale Staton on Unsplash)