UBS downgrades Knight Transportation stock rating to Neutral on limited upside

Investing.com - UBS downgraded Knight Transportation (NYSE:KNX) from Buy to Neutral on Friday, while raising its price target to $51.00 from $46.00. The stock currently trades at $44.11, with InvestingPro data showing analyst targets ranging from $43 to $68, reflecting mixed market sentiment.

The downgrade comes as UBS analyst Thomas Wadewitz cited limited upside potential for Knight Transportation stock over the next year, despite the price target increase.

UBS projects only modest growth in freight activity of 1% to 2% for 2026, along with limited truckload market contract rate increases of around 2%, constraining Knight’s earnings potential.

The firm acknowledged that Knight Transportation stock remains sensitive to fluctuations in truckload spot rates and potential interest rate cuts by the Federal Reserve.

UBS emphasized that stronger contract rate increases combined with well-controlled cost inflation would be necessary to drive a meaningful recovery in Knight’s truckload operating ratio, which the firm considers the most important factor for the company’s earnings performance.

In other recent news, Knight-Swift Transportation Holdings Inc. reported its second-quarter 2025 adjusted earnings per share at $0.35, surpassing both Stifel’s estimate of $0.32 and the consensus forecast of $0.33. The company’s core Truckload segment exceeded expectations, aided by cost containment and utilization initiatives. Stifel responded to the earnings report by raising its price target for Knight Transportation to $47.00 while maintaining a Hold rating. Additionally, Benchmark reiterated its Buy rating with a $55.00 price target, citing Knight Transportation’s strong positioning and successful cost reduction efforts in the Truckload segment.

The company also declared a quarterly cash dividend of $0.18 per share, payable on September 22, 2025. In other developments, Knight-Swift announced its support for the proposed merger between Union Pacific Railroad and Norfolk Southern Corporation, which would create a coast-to-coast railroad. Meanwhile, Secretary of State Marco Rubio announced a halt to the issuance of worker visas for commercial truck drivers, which could affect trucking stocks. These recent developments highlight significant movements and decisions impacting Knight-Swift and the broader transportation sector.

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