What: Shares of Wabash National Corporation (NYSE:WNC) were sliding today, as Stifel downgraded the company. As of 3:29 p.m. ET, the stock was down 8.7% and had fallen as much 10.4%.
So what: The research firm lowered its rating on the truck-trailer maker from "hold" to "sell," saying it expects it to miss semi-trailer production expectations in 2017-2018, which could lead to an earnings miss. It also put an $11 price target on the stock. It wasn't clear if there was any further justification for the downgrade.
Now what: The manufacturer is coming off its best first quarter ever and boosted its full-year outlook as adjusted earnings per share more than doubled from the prior-year period to $0.42. Revenue growth was tepid at just 2%, but the company has consistently blown past analyst estimates in recent quarters, beating an EPS estimate of just $0.24 in its latest report as gross margin improved by 470 basis points. Wabash also lifted its full-year EPS guidance to $1.65-$1.75, a 14% increase at the midpoint from last year.
The truck-trailer market is closely tied to the overall economy, so profits should continue to grow if the economy keeps expanding. While analysts are expecting earnings to dip next year, long-term prospects for Wabash still look strong.
Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.