Investing.com -- Citi has adopted a more cautious stance on North American trucking stocks, arguing that strong freight fundamentals and rising earnings expectations are already largely reflected in share prices after a sharp rally across the sector in 2026.

The firm downgraded Old Dominion Freight Line to Sell from Neutral and cut ratings on Saia, Knight-Swift Transportation, and CH Robinson Worldwide to Neutral, citing limited additional upside despite improving industry conditions.

The brokerage acknowledged that trucking companies are positioned to deliver strong second-quarter earnings as freight demand improves and spot rates rise. However, Citi believes this bullish outlook is already widely anticipated by investors, creating a high bar for further stock outperformance. Analysts also warned that investors may be underestimating medium-term risks, including industry capacity additions, valuation multiple compression, increased competition, inflation pressures, and the emergence of autonomous trucking technologies.

Citi’s analysis of the less-than-truckload (LTL) segment found that even under aggressive earnings growth scenarios through 2028, many stocks offer only modest upside if valuation multiples revert to historical levels. The firm noted that valuations across major LTL carriers are near decade highs, with stocks such as Old Dominion, XPO and Saia trading at elevated forward earnings multiples.

Among individual names, Citi downgraded Old Dominion to Sell despite raising earnings estimates, arguing that even a return to record profitability and pandemic-era freight volumes would imply little share-price appreciation if the stock’s valuation normalizes. The firm also downgraded Saia to Neutral, saying the company’s strong growth prospects from its national expansion are increasingly reflected in its share price.

Knight-Swift was lowered to Neutral as Citi believes improving truckload fundamentals and rising spot rates have already been priced into the shares. Meanwhile, CH Robinson was downgraded after recovering losses tied to the Supreme Court’s Montgomery decision, leaving limited upside to Citi’s target price.

Despite the broader downgrade cycle, Citi maintained Buy ratings on TFI International and ArcBest. TFI remains the firm’s top trucking pick, supported by operational improvement opportunities, exposure to rising flatbed rates, and potential value creation from a planned truckload business divestiture. ArcBest also retained a Buy rating due to its earnings growth potential and improving operational execution.

The firm added that growing competition—including a recently expanded LTL offering from Amazon—and the possibility of new capacity entering the market as freight rates rise could eventually pressure industry margins, reinforcing its view that trucking stocks have risen "too far, too fast" and warrant greater investor caution.