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On Wednesday, Evercore ISI issued a downgrade for Werner Enterprises (NASDAQ:WERN) stock, moving the rating from In Line to Underperform and reducing the price target to $21 from the previous $27. The stock, currently trading at $27.66, has already declined over 22% year-to-date and is hovering near its 52-week low of $26.50. According to InvestingPro data, nine analysts have recently revised their earnings estimates downward for the upcoming period. The transportation and logistics company reported a first-quarter loss per share of $0.12, which was notably below the Evercore ISI estimate of $0.11 and the consensus forecast of $0.12. The disappointing results were attributed to a combination of elevated insurance costs, including a substantial nuclear verdict, severe weather conditions, and increased spending on information technology. Despite these challenges, InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 1.66, and has impressively maintained dividend payments for 39 consecutive years. For deeper insights into Werner’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
The report from Evercore ISI detailed that while some of the cost pressures might not recur, insurance expenses have consistently been above long-term averages for the past two quarters. Moreover, it is expected that there will be additional quarters before the increased IT expenditures begin to yield operational efficiencies. In response to the challenges in the truckload (TL) market, Werner has announced a plan to increase its cost savings target for the year to $40 million, up from $25 million.
Despite winning significant new contracts for its Dedicated business segment, which is anticipated to be beneficial over the medium term, the underlying fundamentals of Werner’s Truckload and Logistics operations remain weak. The firm noted that Werner’s defensive operating strategy has not effectively protected the company from market downturns as it has in the past. The report indicated that recent performance shortfalls have been more significant for Werner compared to its peers, setting a low baseline for recovery.
Evercore ISI analysts expressed a cautious stance on the TL market overall and could not justify assigning Werner a higher valuation multiple than its competitors. With downward revisions to Werner’s earnings estimates for 2025 and 2026, the analysts anticipate more downside risk to the company’s stock. The revised earnings estimates are now set at $0.32, down from $0.80 for 2025, and $1.15, down from $1.53 for 2026. The combination of these factors led to the decision to downgrade the stock and lower the price target.
In other recent news, Werner Enterprises reported their Q1 2025 earnings, which fell short of analysts’ forecasts. The company posted an earnings per share (EPS) of $0.13, missing the forecasted $0.14, while revenue reached $712.1 million, below the expected $738.65 million. The company attributes these results to increased insurance costs, extreme weather, and elevated technology spending, which have led to operational inefficiencies. Despite these challenges, Werner has increased its 2025 cost savings target from $25 million to $40 million, with $8 million already achieved in Q1. Analysts from firms like TD Cowen and Citigroup (NYSE:C) have raised concerns about the company’s ability to manage insurance costs and the impact of tariff uncertainties. Werner’s CEO, Derek Leathers, noted that while the results did not meet expectations, the company is focused on improving its structural efficiency and remains optimistic about its long-term trajectory. The company also expects fleet growth primarily in the Dedicated segment and is monitoring economic conditions closely.
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