EU and US could reach trade deal this weekend - Reuters
On Thursday, BofA Securities issued a new rating for TFI International (NYSE:TFII), downgrading the company’s stock from Neutral to Underperform. The change comes with a significant reduction in the price target, now set at $109.00, down from a previous target of $136.00. According to InvestingPro data, the stock currently trades at $108.01, near its 52-week low, with analyst targets ranging from $135.10 to $190.00. The downgrade was prompted by concerns over escalating costs, anticipated stagnant earnings for 2025, and the loss of profitable small- to medium-sized business customers.
BofA Securities analysts pointed to a challenging outlook for TFI International, noting that the company is likely to face flat earnings in 2025. This projection is partly due to accelerating costs and a trend of losing profitable customers in the small- to medium-sized business segment. As a result, the firm has adjusted its price objective (PO) to $109.00, which is equivalent to C$152, from the former $136.00 (C$190).
The firm has also revised its earnings per share (EPS) estimates for TFI International for the years 2025 and 2026. The new estimates show a 12% decrease for 2025 EPS to $5.70, down from $6.45, and an 8% decrease for 2026 EPS to $7.65, down from $8.30. InvestingPro data reveals that 7 analysts have recently revised their earnings downwards, though the company maintains a GOOD financial health score with strong profitability metrics. These reductions reflect the analysts’ expectations of the company’s performance in light of the identified challenges.
The valuation multiple applied by BofA Securities to TFI International has also been adjusted, now sitting closer to the top end of the company’s historical range of 11x-17x. The new multiple is set at 19.0x, a decrease from the previous 21.0x. This adjustment is attributed to the increasing cost pressures that are expected to impact the company’s profitability.
In their commentary, BofA Securities analysts highlighted the reasons behind the downgrade and price target adjustment, stating, "We lower our rating on TFI International to Underperform from Neutral given accelerating costs, likely flat earnings in 2025, and increasing loss of profitable small- to medium sized business customers. We lower our PO to US$109/C$152 (from US$136/C$190), on 19.0x (from 21.0x). We decrease our 2025 and 2026 EPS estimates 12% and 8%, to $5.70 and $7.65, from $6.45 and $8.30. Our multiple falls closer to the top of its 11x-17x historical range given increasing cost overhang."
In other recent news, TFI International reported its fourth-quarter earnings for 2024, showing an adjusted earnings per share (EPS) of $1.19, a 30% decrease from the previous year. This result fell short of both BofA Securities’ projection of $1.53 and the consensus estimate of $1.58. The company’s Less-than-Truckload (LTL) segment, particularly the U.S. LTL operations, contributed significantly to the earnings miss. Additionally, TFI International’s Ground Freight Pricing (GFP) revenue reported a 58% decrease from the previous year, further impacting financial outcomes. In response to these developments, BofA Securities reduced TFI International’s stock price target to $136 from $145, while maintaining a Neutral rating. Despite these challenges, TFI International announced a quarterly dividend increase to $0.45 per share, a 13% rise from the previous rate. This move indicates the company’s commitment to returning value to shareholders. Meanwhile, Stifel analysts have highlighted risks in the U.S. transport sector, noting lower earnings expectations and the need for strategic investments amid various economic pressures.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.