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On Monday, Morgan Stanley (NYSE:MS)’s analysis led to an adjustment in the outlook for Saia Inc. (NASDAQ: NASDAQ:SAIA), with the firm’s rating being upgraded from Underweight to Equalweight. However, the price target was simultaneously lowered to $250 from the previous $270. The revision reflects a recalibration of expectations for the trucking company’s stock value. According to InvestingPro data, Saia currently trades at a P/E ratio of 20.5x, with 14 analysts recently revising their earnings expectations downward for the upcoming period.
The upgrade comes after a period of significant growth for Saia stock, which, along with XPO, experienced considerable gains following post-Yellow Corporation (YELL) industry dynamics. Saia’s shares surged by 125% from April 2023 to their peak, benefiting from market optimism. Recent InvestingPro data shows the stock has experienced significant volatility, with a 48.8% decline over the past six months and currently trading near its 52-week low. Morgan Stanley analysts believe that while these dynamics provided a boost, they were not transformative for the less-than-truckload (LTL) sector as some bulls anticipated.
Morgan Stanley’s analysis suggests that Saia’s stock has now returned to its pre-YELL valuation, which is deemed closer to fair value, especially as consensus earnings expectations are likely to decrease. Current data from InvestingPro shows trailing twelve-month diluted EPS of $12.03, with analysts forecasting EPS of $9.29 for the upcoming fiscal year. The firm continues to hold the view that Saia’s normalized earnings per share (EPS) would likely fall within the $13 to $15 range. Using a long-term (pre-COVID) average multiple of 18 times, this forecast aligns with the discounted cash flow (DCF)-derived $250 stock price target.
The analysts noted that if Saia can demonstrate a trajectory towards achieving an EPS exceeding $15, there is potential for the stock’s multiple to expand to 20 times. Nonetheless, they advise caution against further extrapolation of both the long-term normalized EPS and the stock’s multiple. The revised rating and price target reflect a balanced view of Saia’s current position and future potential in the market. For deeper insights into Saia’s valuation metrics and additional ProTips, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro.
In other recent news, Saia Inc. reported its first-quarter 2025 earnings, which fell short of analyst expectations. The company announced an earnings per share (EPS) of $1.86, missing the projected $2.77. Revenue for the quarter reached $787.6 million, slightly below the anticipated $810.04 million, marking a 4.3% increase year-over-year. Despite this revenue growth, Saia’s profitability declined, with an operating ratio worsening to 91.1% from 84.4% in the previous year. The company continues to invest in its network expansion, having opened 21 new facilities over the past 12 months.
In a separate development, BMO Capital Markets downgraded Saia’s stock rating from Outperform to Market Perform, also slashing the price target from $455.00 to $285.00. This adjustment reflects BMO’s assessment of Saia’s challenges in balancing its expansion with maintaining profit margins amid a freight recession. Despite these challenges, BMO Capital maintains a positive outlook on the logistics sector, recommending XPO Logistics (NYSE:XPO) with an Outperform rating. Saia’s recent performance highlights unique challenges specific to the company, as opposed to broader industry issues, according to BMO’s analysis.
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