Werner's Dedicated Business Shines Amidst Truckload Challenges: Analyst Highlights Strategy And Margin Pressures

Credit Suisse analyst Ariel Rosa reiterated a Neutral rating on the shares of Werner Enterprises Inc WERN and raised the price target from $48 to $49.

Werner reported 2Q23 adj. EPS of $0.52, below the analyst’s $0.64 estimates.

The analyst said the 40% year-on-year decline in 2Q earnings reflected the depth of the challenges in freight markets, particularly in truckload.

The company’s management has noted headwinds from inventory destocking, monetary tightening, and excess truckload capacity.

Werner continues to make changes to adjust to the less favorable

freight conditions, including trimming its fleet, the analyst observed.

However, the analyst feels Werner has managed quite well through this difficult period, with revenue per truck per week net of fuel down a modest 5.2% in its One-Way Truckload division and up 1.5% in its Dedicated business.

Nevertheless, margins continue to get squeezed given inflationary cost pressures, as adjusted operating margins deteriorated in its Truckload segment and in Logistics.

The analyst lowered 2023, 2024, and 2025 adj. EPS estimates by -14%, -9% and -5% to $2.40, $3.05, and $3.80 from $2.80, $3.35, and $4.00, respectively.

Price Action: WERN shares are trading lower by 0.83% at $43.60 on the last check Wednesday.

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