Benchmark cuts Saia stock price target to $325 from $450

On Monday, Benchmark analyst Chris Kuhn revised the price target for Saia Inc. (NASDAQ: NASDAQ:SAIA) shares to $325, a significant decrease from the previous target of $450, while still maintaining a Buy rating on the company’s stock. This adjustment follows Saia’s disappointing earnings report released on Friday, which fell short of expectations by more than 30%. The company’s performance also prompted a substantial 30% drop in its stock price, bringing its price-to-earnings ratio to 20.25x. According to InvestingPro data, the stock is currently trading near its 52-week low of $229.21, with analyst targets ranging from $250 to $515, suggesting potential upside despite recent challenges.

Saia’s recent financial struggles were attributed to a variety of factors, including adverse weather conditions that affected operating ratios by 25 to 75 basis points. However, a more pressing concern was the lower-than-expected volume trends in March, particularly in the company’s older, higher-margin legacy terminals, which experienced a decline in shipment growth. This decline negatively impacted the quarter’s results. Despite these challenges, InvestingPro data shows the company maintains strong fundamentals with $3.24 billion in revenue and a healthy gross margin of 25.36%. The newer terminals reported growth in shipments, yet these facilities are less profitable as they are still building up their volume.

The company is facing increased costs due to the expansion of new facilities, which, coupled with the decline in shipments, has led to a significant disparity between cost and revenue per shipment—the widest gap observed by the analysts. Despite the current headwinds faced by the less-than-truckload (LTL) industry, including competition from companies like Amazon (NASDAQ:AMZN) and UPS, as well as a shift from LTL to truckload (TL) transportation and excess capacity, Benchmark attributes the core issue to a weak industrial environment and overall economic softness that is limiting Saia’s operational leverage. InvestingPro analysis indicates the company operates with moderate debt levels and maintains liquid assets exceeding short-term obligations, providing financial flexibility during this challenging period.

In comparison, Old Dominion Freight Line (NASDAQ:ODFL) demonstrated better-than-expected operating ratios, suggesting that even a slight uptick in industrial activity can significantly enhance performance, highlighting the potential for operating leverage in the industry. Despite the lowered price target and revised estimates, Benchmark remains optimistic about Saia’s long-term prospects, citing a historical consistency in revenue and cost per shipment spreads, excluding the period affected by the pandemic. This optimism is supported by InvestingPro metrics showing strong returns over both the last five and ten years, with analysts projecting continued profitability for the current year.

In other recent news, Saia Inc. reported its first-quarter 2025 earnings, which fell short of analyst expectations. The company posted earnings per share (EPS) of $1.86, significantly missing the forecast of $2.77, and reported revenue of $787.6 million, below the expected $810.04 million. Following these results, Saia’s stock experienced a notable decline. Analyst firms have adjusted their outlooks in response to these developments. Raymond (NSE:RYMD) James revised Saia’s price target to $310 from $455 while maintaining an Outperform rating, citing strategic investments in capacity as a positive long-term factor. Morgan Stanley (NYSE:MS) upgraded Saia’s stock rating from Underweight to Equalweight but lowered its price target to $250, reflecting recalibrated expectations. Meanwhile, BMO Capital Markets downgraded Saia from Outperform to Market Perform and slashed the price target to $285, highlighting challenges in executing its growth strategy amid a freight recession. These adjustments reflect the cautious stance of analysts as Saia navigates its current operational challenges.

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