TFII - Trucking stocks rally as potential Yellow bankruptcy is factored in
2023-06-27 15:56:23 ET
The trucking sector is reacting to news that Yellow Trucking Company ( YELL ) could be heading for a bankruptcy. Yellow ( YELL ) is facing severe financial pressure with outstanding debt as of March 31 of $1.5B.
Bank of America sees big upside for other trucking stocks if Yellow were to file for bankruptcy or restructure. A smaller Yellow fleet is forecast to materially drive LTL pricing higher. In looking at the sector as a whole, Analyst Ken Hoexter and team estimate that a year-to-date LTL demand decline in the mid-to-high single digits range could be balanced by Yellow's ( YELL ) exit.
"We would view YELL’s financial pressures as a positive for its peer LTL industry operators given immediate pricing and volume gains and positive leverage. If YELL were to exit the market, we would expect non-union carriers leading in service such as ODFL/SAIA to outperform through profitable share gains as capacity levels flex higher. We would also expect XPO (80% of mix national account) to outpace on diversions from multi-channel shippers given YELL’s high national account mix."
The firm boosted its ratings on Saia ( SAIA ), Old Dominion Freight Line ( ODFL ), and XPO( NYSE: XPO ) to a Buy rating from Neutral. Separately, Saia ( SAIA ) was upgraded at Evercore ISI to Outperform from Market Perform.
The trucking sector in general broke higher on Tuesday amid the Yellow bankruptcy buzz. Gainers included TuSimple ( TSP ) +10.00% , ArcBest Corporation ( ARCB ) +8.11% , TFI International ( TFII ) +7.58% , Old Dominion Freight Line ( ODFL ) +6.70% , Saia ( SAIA ) +5.77% , XPO ( XPO ) +5.22% , Daseke ( DSKE ) +3.88% .and Heartland Express ( HTLD ) +3.05% .
More on Trucking stocks:
- Knight-Swift, Werner Enterprises cut to Hold at Credit Suisse
- Truckload demand stays weak in sign of freight recession
- Old Dominion Freight Line gains after Evercore ISI upgrade
- ArcBest stock skids after Bank of America downgrade
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Trucking stocks rally as potential Yellow bankruptcy is factored in