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Raymond James maintains Outperform on Old Dominion stock, highlights LTL pricing durability

EditorAhmed Abdulazez Abdulkadir
Published 09/12/2024, 11:18
ODFL
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On Monday, Raymond (NS:RYMD) James maintained a positive outlook on Old Dominion Freight Line (NASDAQ:ODFL), with a raised price target of $215.00, an increase from the previous $200.00, while keeping an Outperform rating on the stock. The firm's analysis highlighted the company's robust less-than-truckload (LTL) pricing strategy and the significant market share it holds due to its extensive network and high rate of door ownership.

The company, currently valued at $43.3 billion, has demonstrated strong financial performance with a 40.2% gross profit margin and a notable 30% return on equity.

The analyst at Raymond James underscored Old Dominion Freight Line's resilience amid economic fluctuations and the freight cycle. He pointed out that the company is well-positioned to benefit on the other side of the current freight cycle due to its strong fundamentals and the LTL industry's evolving structure.

According to InvestingPro, despite a recent 9.6% decline in the past week, the stock has maintained a positive 20.8% return over the last six months, demonstrating its resilience.

Old Dominion's network efficiency and the nearly complete control of its doors—approximately 95%—were cited as key long-term competitive advantages that are not fully recognized by the market. These factors contribute to the firm's belief in the company's ability to outperform its peers.

InvestingPro analysis reveals that ODFL holds more cash than debt on its balance sheet and has consistently raised its dividend for 8 consecutive years, with 10 additional ProTips available to subscribers.

The report also suggests that the LTL industry is undergoing a fundamental re-rating as the market starts to appreciate the sustainability of LTL pricing and the strategic value of the networks within this sector. This reassessment is expected to favor Old Dominion Freight Line due to its established position in the industry.

In conclusion, Raymond James' updated price target for Old Dominion Freight Line reflects confidence in the company's pricing strategy and its capacity to maintain a competitive edge in the LTL market. The firm anticipates that these attributes will continue to drive Old Dominion's performance, even as the broader economy and freight tonnage experience variability.

While trading at elevated multiples, detailed valuation analysis and comprehensive research reports are available through InvestingPro, helping investors make informed decisions about this transportation leader.

In other recent news, Old Dominion Freight Line has experienced a series of adjustments in analyst price targets following a year-over-year decrease in daily revenue of 8.2% for November.

Analyst firms such as TD Cowen, BMO Capital Markets, Baird, and BofA Securities have revised their stock price targets for Old Dominion, with TD Cowen setting a new target of $196.00, BMO Capital Markets adjusting its price target to $205, Baird lowering its price target to $200, and BofA Securities decreasing its target to $195.

The company reported a modest beat in third-quarter earnings per share, but a 3% decline in revenue. Old Dominion also anticipates a rise in its operating ratio to between 75.7% and 76.2%, less favorable than the previous target of 74.3%.

Despite these challenges, Citi maintains a Neutral rating on Old Dominion shares, reflecting the firm's anticipation of a turning point in the freight market. The company is also expected to halt capital expenditures next year, possibly supporting further share buybacks, contingent upon a favorable shift in less-than-truckload (LTL) demand.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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