Trucking stocks tumble, but Citi sees opportunity in chaos

Analysts flag risks to Q1 earnings amid tough macroeconomic conditions but note a silver lining: slower economic activity could accelerate capacity rationalization, potentially pushing marginal carriers out of the market faster.

Tender rejections have increased the past week, suggesting truckload capacity is tight enough to respond to demand fluctuations. (Chart: SONAR. To learn more about SONAR, click here)

In light of these dynamics, Citi upgraded Knight-Swift Transportation (KNX) to Neutral. KNX, a bellwether for early-cycle transport sentiment, has been volatile in 2025—rising 11% early in the year, then dropping 20% from its January 27 peak, including a 4% sell-off on a recent Friday. Analysts attribute this dip to market sentiment, not fundamentals.

Despite near-term earnings risks from rate pressure, KNX’s share price has fallen below Citi’s $53 target, creating a balanced risk-reward profile—bolstered by management’s expertise in navigating transport cycles.

The report also covers rail, advocating a two-pronged strategy with Canadian Pacific (CP) and CSX. CSX remains a top pick despite short-term headwinds, thanks to its lowest P/E ratio among rail operators and projected 2026 gains—appealing for long-term investors.

Citi retains Buy ratings for CP and CSX, citing their resilience against macro risks like valuation concerns, tariff exposure, U.S. manufacturing weakness, and investment timelines.

Ultimately, while trucking grapples with spot rate declines and economic uncertainty, Citi’s analysts see opportunities emerging from these conditions across both trucking and the broader transport sector.