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On Thursday, Stephens analysts adjusted their outlook on Old Dominion Freight Line (NASDAQ:ODFL) shares, reducing the price target to $180 from the previous $200. Despite this change, the firm maintained its Overweight rating on the stock. The revision followed Old Dominion’s first-quarter earnings, which surpassed expectations with operating ratio (OR) outperforming amid ongoing demand challenges. The company experienced negative tonnage, somewhat balanced by stronger-than-expected realized yields, attributed to Old Dominion’s top-tier service quality. Trading at $153.23, the stock has declined 13% year-to-date, now near its 52-week low of $145.79. InvestingPro data reveals 11 analysts have recently revised their earnings expectations downward for the upcoming period.
The company’s revenue in April was reported to be trending below typical seasonal patterns, partly due to the timing of Good Friday and Easter. Furthermore, the second-quarter outlook anticipates revenue and OR to continue underperforming seasonally, with guidance indicating lighter trends than initially projected by Stephens. As a result, the analysts have moderated their second-half 2025 estimates, assuming a return to normal seasonal movements. With trailing twelve-month revenue of $5.73 billion and a GOOD Financial Health Score from InvestingPro, the company maintains strong fundamentals despite current headwinds.
Old Dominion has also revised its capital expenditure (CapEx) budget downwards, affecting both rolling stock and service centers/real estate investments. Despite this, the analysts believe that the company’s free cash flow (FCF) generation will adequately support its ongoing share repurchase programs, especially considering the decline in share prices this year.
Stephens analysts highlighted Old Dominion’s excess capacity as a strategic advantage, positioning the company favorably to gain market share during an upturn in the industry. They recommend investors to consider the current dip in share prices as an opportunity to build positions in anticipation of a market inflection. The Overweight rating remains, with the price target adjusted to $180, down from $200.
In other recent news, Old Dominion Freight Line reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of $1.19, which surpassed the forecasted $1.16. However, the company’s revenue fell slightly short at $1.37 billion, compared to the anticipated $1.38 billion, marking a 5.8% decline year-over-year. Despite the revenue miss, Old Dominion maintained its market share between 12.5% and 13%. The company’s operating ratio increased to 75.4%, with cash flow from operations reported at $336.5 million. Additionally, Old Dominion made capital expenditures amounting to $88.1 million and repurchased shares worth $201.1 million. Analysts from firms like Goldman Sachs and Evercore ISI have been closely monitoring the company’s performance, noting its strategic focus on yield management and market share stability. Looking ahead, Old Dominion anticipates a 6% decline in April revenue but expects an improvement in the operating ratio in the second quarter of 2025.
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