Street Calls of the Week
Investing.com -- Stifel raised Knight-Swift and Schneider National to Buy, saying new regulatory rules could tighten U.S. trucking capacity and spark a cyclical rebound, as freight demand remains weak.
Two rules could reduce available drivers: stricter enforcement of non-domiciled commercial driver’s licenses and English Language Proficiency requirements, each potentially cutting the workforce by about 5%.
While timelines are uncertain, Stifel said the combined effect could meaningfully tighten supply and support rates.
“Meaningful uncertainty in the downstream consumption outlook will likely result in a muted peak,” analysts at Stifel said.
Consensus is that there is still too much supply and rationalization remains slow.
The brokerage said freight volumes are patchy and sub-seasonal, with uncertainty around consumption, interest rates, trade policy, and recession risk weighing on shippers.
Spot and contract rates have remained muted, though shippers are willing to pay for reliability and optionality, limiting downside to pricing.
Knight-Swift and Schneider were singled out for their scale, consistent earnings, and ability to benefit from a potential capacity-driven upturn.
Stifel noted that upside depends on demand remaining stable and supply constraints materializing.
Valuations in the trucking sector have declined sharply, making the risk-reward for well-positioned names increasingly attractive, even in a weak volume environment.