Trucking firms tumble after JB Hunt, Knight-Swift signal longer road to recovery (updated)

ArcBest

17/04/2024 21:13

(Updates to closing prices)
    By Abhinav Parmar
       April 17 (Reuters) - Shares of U.S. trucking firms fell
on Wednesday, after dismal quarterly numbers from JB Hunt
Transport Services  JBHT.O  and Knight-Swift Transportation
Holdings  KNX.N  signaled a longer wait for a rebound in the
freight industry.
    Freight companies have been grappling with reduced transport
volumes on account of a shift in consumer spending from goods to
services, combined with global shipping delays.
    In what TD Cowen analysts called an "ominous start for
transport earnings", JB Hunt missed first-quarter estimates on
Tuesday as it struggled with weak demand for intermodal services
— its biggest segment.
    Knight-Swift trimmed its profit forecasts for the first and
second quarters earlier on Wednesday, blaming an oversupply of
capacity in the trucking industry, disruption from frigid
weather in January and increased pressure on freight rates with
shippers trying to push down prices further.
    "The bottom has become longer and deeper than feared ...
even with an inflection in either demand or supply in the coming
months, ongoing weakness ... could set JB Hunt's revenue and
margins back for much of the remainder of the year," said
Evercore analyst Jonathan Chappell.
    Knight-Swift's report was "worse than the worst case",
Chappell said, adding both reports confirm "the greater pressure
at the end of the freight recession ... and reset the launch pad
for an eventual cyclical recovery substantially lower".
    At least 11 brokerages cut price targets on JB Hunt.
    Shares of JB Hunt and Knight-Swift closed down 8.1% and
4.3%, respectively, while transportation peers such as Werner
 WERN.O  and ArcBest  ARCB.O  closed down 2% and 6.2%.
    "There does not seem to be a catalyst that can drive a
meaningful change in the volume and/or pricing environment,"
Stephens analyst Justin Long said.
    According to TD Cowen analyst Jason Seidl, "Hopes of a
(second-half) recovery become increasingly challenged given
current setup."

 (Reporting by Abhinav Parmar, Deborah Sophia and Aatreyee
Dasgupta in Bengaluru; Editing by Shilpi Majumdar)
 ((Abhinav.Parmar@thomsonreuters.com))