2023-05-01 07:34:05 ET
Bank of America lowered its rating on ArcBest Corporation ( NASDAQ: ARCB ) to Underperform from Neutral on Monday.
Notably, the integrated logistics company's high-cost infrastructure is said to have historically constrained its ability to post profits in downturns.
While the LTL market is called competitive for ArcBest ( ARCB ), the move to add spot freight is expected to pressure yields and compress margins. On the balance sheet, ARCB's higher negative leverage versus peers is said to pose a risk of exaggerating earning declines in a decelerating freight environment.
Analyst Ke Nhoexter and team see ArcBest's Teamsters contract expiration in July as an uncertainty given an antagonistic labor backdrop.
On the valuation, ArcBest ( ARCB ) is noted to have traded at a 14.9X average over the past decade, and between 7X-18X over the prior 20 years, with shares peaking in freight downturns, around 21X-25X forward earnings.
Bank of America assigned a price objective of $91 to ArcBest ( ARCB ).
Shares of ArcBest ( ARCB ) fell 1.66% in premarket trading on Monday.
More on ArcBest:
- ArcBest Corporation: The Ride Has Room To Run From Here
- Read more breakdowns on ArcBest from Seeking Alpha analysts
- See the financial and valuation comparisons to sector peers
- Dig into the Seeking Alpha Quant Rating
- View the relative strength index and moving averages
For further details see:
ArcBest stock skids after Bank of America downgrade