A pop on Q3 earnings leaves the risk/reward proposition for Universal Logistics Holdings ( NASDAQ: ULH ) balanced, according to Stifel.
“Supply chains are beginning to normalize, and that has been a good thing for the Contract
Logistics business, in our view, which is allowing the business unit to perform as intended
—perhaps even better, as it drove 3Q22 beyond our expectations on both top line and
Margins,” equity analyst J. Bruce Chan acknowledged. “But that normalization has started to show up in valuation, too, with the stock having doubled from where it was at the outset of the year.”
As such, he sees the valuation at a fair level for his prior Outperform rating to be reverted to Neutral. In fact, certain adverse conditions for the firm are perhaps being overlooked, in his view.
“Economic headwinds are putting pressure on the Transportation side of the house, and the company has some work to do in navigating the back half of the business cycle, especially with regard to Trucking and Company-Managed Brokerage,” Chan commented. “So, while we see upside from here over the long run, we'll choose to exercise a bit of valuation discipline and step to the sidelines for now.”
Alongside the downgrade, Chan reiterated his $36 price target, which he has held since late July. Shares had risen over 20% since that prior ratings update, bookended by a . The Michigan-based logistics firm’s stock fell 1.77% prior to Wednesday’s open.
Read more on bearish results from C.H. Robinson on Wednesday .
For further details see:
Universal Logistics downgraded at Stifel after recent run