Stifel Upgrades Knight Transportation (KNX) to Buy

Stifel analyst J. Bruce Chan upgraded Knight Transportation (NYSE: KNX) from Hold to Buy with a price target of $45.00 (from $47.00).

The analyst comments "As a bellwether for the truckload industry, the stock has languished with a three-year freight recession, characterized primarily by a supplyled spot price trough. However, we believe valuation is poised to inflect, as supply fundamentals have likely bottomed; new equipment that entered in the wake of COVID is reaching the midpoint of its depreciation life-cycle, spot rates have been non-compensatory for too long, and we are beginning to see early signs of regulatory pressure on driver supply, in our view. For Knight, we think incremental cost savings and the strategic pivot into LTL should help support earnings and valuation, respectively, from here as well. Absent a more material demand degradation, which is not our base case right now, it's difficult for us to see shares trading much lower from here, so with a favorable risk/ reward setup at current levels and the prospect of supply tightening we’re upgrading shares of KNX to a Buy rating. As the largest assetbased truckload provider in the country, and we see continued room for KNX to drive cost savings through its scale advantage and a revenue premium from its ability to utilize spot pricing when appropriate. Further, we believe Knight's earnings power expansion from last cycle remains underappreciated in the context of the company's valuation."

For an analyst ratings summary and ratings history on Knight Transportation click here. For more ratings news on Knight Transportation click here.

Shares of Knight Transportation closed at $39.90 yesterday.

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