TFII - ArcBest SAIA started at Buy as Jefferies sees undervalued opportunities

2023-06-12 08:23:22 ET

ArcBest ( ARCB ) and SAIA ( SAIA ) each gained bullish initiations on Monday as Jefferies told clients it sees undervalued names in trucking.

The firm’s analysts explained that it expects SAIA to see “above-peer top-line growth and margin gains” over the long term as it continues to improve network density and execution.

SAIA was started at Buy with a $350 price target. ArcBest ( ARCB ) was also started at Buy on Monday, with an even greater projected upside with a $110 price target given its diversified operations.

“Our rating is based on our belief that the Street is discounting the company's multi-modal offering,”  equity analyst Stephanie Moore said. “With shares valued below the levels of the past two freight recessions, we believe ARCB is receiving no credit for the structural margin gains in its LTL business, or for its prospects of above-peer growth in an upturn.”

She added that she views TFI International’s ( TFII ) notable stake in the logistics name as a potential catalyst as well.

“With TFI's track record of M&A (it bought UPS Freight for $800M), we perceive an interesting call option on ARCB shares, whereby TFI could potentially make an offer for some or all of ARCB's assets, though neither company has explicitly confirmed this. At current levels, we see the Street assigning $0 of value to this possibility,” she noted.

Elsewhere, Old Dominion Freight Lines ( NASDAQ: ODFL ) was started at Hold due to its premium valuation as compared to its trucking industry peers. While the company is “best-in-class within T&L,” according to Moore, it is fairly valued to reflect this status.

More on Trucking stocks:

Knight-Swift, Werner Enterprises cut to Hold at Credit Suisse

Old Dominion Freight Line gains after Evercore ISI upgrade

ArcBest stock skids after Bank of America downgrade

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