Morgan Stanley again adjusts its Fed forecast, now sees 4 cuts in 2026
On Tuesday, BofA Securities made adjustments to its outlook on Knight Transportation (NYSE: NYSE:KNX), reducing the stock's price target from $64.00 to $61.00 but retaining a Buy rating. The revision reflects lowered earnings per share (EPS) estimates for the coming years, citing a slower increase in truckload rates than previously anticipated.
Currently trading at $54.92, Knight Transportation shows mixed signals with a high P/E ratio of 238.28, while analyst targets range from $48 to $70. InvestingPro analysis reveals additional insights through its comprehensive research reports, available for over 1,400 US stocks.
The analyst at BofA Securities has recalibrated the EPS forecasts for Knight Transportation, noting a 10% decrease for the fourth quarter of 2024 to $0.32, aligning with the lower end of the company's target range of $0.32-$0.35. The projections for the full year 2024 have been trimmed by 3% to $1.07, and the following year's estimate has been reduced by 8% to $1.90.
The EPS estimate for 2026 also saw a 5% cut, now set at $3.40. Despite these adjustments, the company maintains a strong dividend track record, having raised dividends for 5 consecutive years with a current yield of 1.17%.
For the first quarter of 2025, the firm's EPS estimate has been adjusted downward to $0.30 from $0.34. This estimate is near the lower end of Knight Transportation's target range of $0.29-$0.33. The modifications in the EPS estimates are primarily attributed to a more gradual pace in the growth of truckload rates than the previously expected mid-single-digit revenue per total mile increases.
The analyst elaborated on the rationale behind the adjustments, indicating that the initial forecast had anticipated a more robust growth trajectory for truckload rates, starting with mid-single-digit increases. However, the revised expectation is for a more modest low-single-digit growth rate that will gradually strengthen throughout 2025.
In other recent news, Knight-Swift Transportation Holdings Inc. has announced a quarterly cash dividend of $0.16 per share, signaling the company's financial health and commitment to shareholder value.
The company has also been the subject of various analyst evaluations. Citi downgraded Knight-Swift from Neutral to Sell, citing potential challenges ahead, while TD Cowen maintained a Buy rating and raised the stock's price target to $56. Meanwhile, BofA Securities increased Knight-Swift's price target to $58 after the company's third-quarter earnings exceeded projections.
Knight-Swift reported a 5.3% revenue decline, mainly due to the recent acquisition of U.S. Xpress, but also noted growth in intermodal revenue for the first time in six quarters. The company has provided forward-looking guidance for the fourth quarter of 2024 and the first quarter of 2025, with adjusted EPS projected to range from $0.32 to $0.36 and $0.29 to $0.33, respectively.
Amid these recent developments, Knight-Swift anticipates a gradual market recovery in 2025, with potential rate increases and margin enhancements due to investments in terminal networks.
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