Shares of Knight Transportation Inc. rose Tuesday after a Wachovia analyst upgraded the stock but voiced growing pessimism about the U.S. economy and other trucking stocks.
Justin Yagerman said trucking stocks have gained ground recently because investors expect business to pick up as the economy improves. But he thinks that improvement "is likely further off than initially expected." He downgraded shares of Arkansas Best Corp. and Old Dominion Freight Line Inc., saying analyst estimates are too high.
He added that light trucking companies will struggle with soft demand, high diesel costs and price competition in the second half of the year.
Yagerman downgraded shares of Arkansas Best to "Underperform," or "Sell," from "Market Perform," and he lowered his rating on Old Dominion to "Market Perform" from "Outperform." He said he prefers larger, truckload companies to smaller, less-than-truckload stocks.
The analyst said truckload stocks usually recover before lighter trucking stocks, and he added that Knight will benefit from decreasing capacity. He raised his rating to "Outperform" from "Market Perform."
Knight shares rose 98 cents, or 5.7 percent, to $18.15.
Arkansas Best shares lost 54 cents to $36.40.
Old Dominion stock rose 33 cents to $28.39.
Yagerman kept "Outperform" ratings on shares of CH Robinson Worldwide Inc., Con-Way Inc. and JB Hunt Transport Services Inc., and an "Underperform" rating on YRC Worldwide Inc.
Terms & Conditions
RSS Headlines
Fool UK