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Investing.com - Stifel raised its price target on ArcBest Corp (NASDAQ:ARCB) to $85.00 from $81.00 on Tuesday, while maintaining a Buy rating on the stock. The freight transportation company, currently valued at $1.71 billion, trades at an attractive P/E ratio of 11x. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics.
The freight transportation company faces a "mixed, but generally weak macro backdrop" for the Less-than-Truckload (LTL) sector, according to Stifel’s research note. Interest rate uncertainty, renewed trade tensions, and geopolitical concerns are weighing on both demand and market sentiment as the third-quarter 2025 reporting season approaches. InvestingPro data shows the company’s high beta of 1.66 indicates significant sensitivity to market conditions, while maintaining relatively modest debt levels.
Stifel’s channel checks and intra-quarter data indicate operations remain "soft but stable," with below-seasonal demand resulting from uneven restocking and slow industrial activity. Core pricing remains solid despite the volume challenges, and diesel prices have increased year-over-year. The company’s gross profit margin stands at 8.35%, with annual revenue of $4.05 billion. InvestingPro subscribers can access 10+ additional exclusive insights and a comprehensive Pro Research Report, offering deeper analysis of ArcBest’s financial health and market position.
While capacity remains ample across the LTL industry due to soft demand, Stifel notes that supply may soon tighten in the Truckload sector, which could provide rate support in 2026. Carriers with "more idiosyncratic cost reduction opportunities" have performed better during this extended market trough.
The overall tone heading into the third quarter of 2025 is characterized as one of "cautious stability," featuring continued yield strength but soft demand and a lack of operating leverage, resulting in margin pressure for most carriers in the sector.
In other recent news, ArcBest has announced its financial targets for 2028, aiming to become a technology-enabled logistics provider. The company has set ambitious goals, including a non-GAAP diluted earnings per share of $12 to $15 and operating cash flow of $400 to $500 million. In addition, ArcBest plans to achieve a return on capital employed of 16% to 19% by 2028. The board of directors has also approved an increase in the company’s share repurchase authorization to a total of $125 million. Meanwhile, ArcBest’s recent second-quarter earnings report revealed earnings per share of $1.36, which fell short of UBS and consensus expectations. UBS responded by lowering its price target for ArcBest to $73, maintaining a Neutral rating. TD Cowen also adjusted its price target to $67, citing industrial economic challenges while keeping a Hold rating. On a more positive note, Stifel reiterated its Buy rating with a price target of $81, highlighting ArcBest’s potential in the Less-than-Truckload sector despite labor cost challenges.
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