High Demand Drives Revenue Gains For Trucking Industry
The trucking industry is at the center of supply chain issues facing the market today. The entire industry has been plagued with a shortage of drivers for years and that cut deeply into capacity and potential for capacity. Now, with demand at record levels throughout the system, that problem has come to the fore. The silver lining, for the truckers at least, is that demand for freight is astronomically high and driving a sustained increase in prices. This should result in better-than-expected revenue and earnings for virtually all freight and shipping companies but not all have been getting upgrades like the ones we’re highlighting today.
Arcbest Corporation Is Revving To New Highs
Arcbest Corporation (NASDAQ: ARCB) received a string of upgrades from the analysts that have the stock revving higher. The company received four price Target increases in the last two weeks that have the stock trading well above the $100 level. These four target increases include the new high price target of $115 which assumes a 35% upside for share prices. Coincidentally, the Marketbeat.com consensus price target of $90 is up 35% in the last three months and we see it moving much higher in the near term. The company has reported a string of better-than-expected quarters marked by accelerating revenue driven by organic and acquisition of growth and we are expecting more of the same.
Arcbest is slated to report earnings on November 1st and will very likely exceed the analyst consensus. The analysts are already expecting nearly $1 billion in net revenue which would set a company record and we see upside risk in the consensus. Shares of Arcbest have been trending strongly higher since the summer and are on track to retest the May highs very soon. We see the stock consolidating between $90 and $95 and then moving higher in the wake of strong Q3 results.
Saia Is About To Move Higher
Shares of Saia (NASDAQ: SAIA) look ready to move higher and the analysts are going to help that happen. This company has received three price target increases including a rating upgrade from Peer Perform to Outperform and we think this is just the beginning of a new trend. The new price targets come with a wide range but notably, the upgrade is coupled to the new high price target. The new high price target of $306 is nearly 30% above the current consensus target which assumes the stock is currently fairly valued. The consensus target has moved higher by 10% in the last three months and we see this figure moving even higher in the near term as well.
Sais is expected to report earnings late in October and deliver a small sequential uptick in revenue to post a company record. We see upside risk in the numbers based on the company's growth activities as well as high levels of demand within the industry. It is our estimation the company will exceed the consensus estimate by at least low to mid-single-digits, as it has 100% of the time over the past 3 years, and drive shares up to a new all-time high.
Old Dominion Freight Line Is a Top Choice
Mega cap Old Dominion Freight Line (NASDAQ: ODFL) is a top pick at Morgan Stanley who just upped its price target to $315. The $315 target matches the recently set Wall Street high price target and will not likely be the last new high target if our assessment of the earnings outlook is correct. The analysts are expecting a very slight incremental increase in revenue on a sequential basis and a company record but it is a bar we think very easy to beat. Assuming Old Dominion Freight Line can get tractors on the road there is freight to be hauled so business should be robust. Shares of ODFL are up more than 2.25% in the wake of the news and appear to be confirming the underlying bull trend. Price action may move sideways in the near term but we expect to see new highs set in the wake of the earnings release.
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