Old Dominion Freight Line, Inc. ODFL shares dropped slightly on Friday. Analyst Fadi Chamoun from BMO Capital Markets downgraded the stock from Outperform to Market Perform, and reduced the price target from $214 to $210.
Chamoun noted that earnings expectations for FY2025 have gone down by 13% to 15%. Demand is low, and a recovery in freight markets is taking longer than expected.
The downgrade signals that more negative updates may be coming as the recovery timeline gets pushed back.
He mentioned that industrial demand, which makes up two-thirds of LTL traffic, remains weak.
While improved monetary policy might eventually increase volume, the gap between falling rates and rising demand could mean recovery isn’t seen until the second half of 2025 or later.
With current valuations at all-time highs, there’s little safety in the short term, according to the analyst.
Chamoun also lowered his FY25 earnings forecast by 2.5% to $6.00 (below consensus of $6.27), and FY26 by 3.3% to $7.06 (compared to $7.15 consensus).
Investors can buy into the stock through the First Trust S&P 500 Diversified Dividend Aristocrats ETF IYT and ProShares Trust ProShares Supply Chain Logistics ETF SUPL.
Price Action: ODFL shares are down 0.82%, trading at $199.86.
Photo via Shutterstock
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