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On Thursday, BMO Capital Markets adjusted its outlook on Old Dominion Freight Line (NASDAQ:ODFL) by reducing the price target from $186.00 to $175.00, while keeping the stock at a Market Perform rating. The decision came in light of persistent demand challenges that are anticipated to affect the company’s short-term performance, despite the fact that Old Dominion’s first-quarter results for 2025 surpassed expectations. According to InvestingPro data, the stock is currently trading near its 52-week low of $145.79, with 11 analysts recently revising their earnings estimates downward. The broader analyst target range spans from $135 to $190, reflecting mixed sentiment in the market.
Old Dominion Freight Line’s financial performance in the first quarter of 2025 was notably 4% higher than projected in terms of EBIT (earnings before interest and taxes) and EPS (earnings per share). Despite current headwinds, InvestingPro analysis shows the company maintains strong fundamentals with a "Good" Financial Health Score of 2.65, generating $5.73 billion in revenue and $1.84 billion in EBITDA over the last twelve months. However, the company’s guidance suggests a weaker than usual performance for the second quarter, which has been attributed to ongoing demand headwinds. This has prompted BMO Capital Markets analysts to revise their earnings per share estimates downwards by 5.8% for fiscal year 2025 and by 6% for fiscal year 2026.
The revised price target of $175 reflects a decrease from the previous target of $186. BMO Capital Markets’ analysis indicates that while there is a favorable skew in potential upside versus downside for Old Dominion’s stock, stemming from the recent pullback in valuation and the company’s medium-term earning potential, the lack of clear visibility into when demand might pick up has led to maintaining the Market Perform rating. For deeper insights into Old Dominion’s valuation and growth prospects, InvestingPro subscribers can access comprehensive financial metrics, including detailed Fair Value analysis and over 30 key financial indicators.
In their commentary, BMO Capital analysts highlighted the balance between the current valuation of Old Dominion’s shares and the medium-term opportunities for earnings growth. They pointed out the favorable odds for upside, as identified in their recent sensitivity analysis. Despite the positive medium-term outlook, the analysts have expressed caution due to the limited visibility into the timing of a demand rebound, which has been a factor in their decision to maintain the current stock rating and lower the price target.
In other recent news, Old Dominion Freight Line reported its first-quarter 2025 earnings, with an earnings per share (EPS) of $1.19, surpassing the forecast of $1.16. However, the company faced a slight revenue miss, reporting $1.37 billion against the expected $1.38 billion, marking a 5.8% year-over-year decline. Despite these mixed results, Stephens analysts maintained their Overweight rating on Old Dominion, though they adjusted the stock’s price target from $200 to $180. The company’s operating ratio increased to 75.4%, and its revenue in April was noted to be below typical seasonal patterns. Looking ahead, Old Dominion anticipates a 6% decline in April revenue but expects an improvement in the operating ratio by approximately 100 basis points in the second quarter. The company also revised its capital expenditure budget downward, impacting investments in rolling stock and service centers, but analysts believe its free cash flow will continue to support share repurchase programs. Despite the challenges, Old Dominion’s market share remained stable between 12.5% and 13%, and the company continues to focus on yield management and service quality as strategic advantages.
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