Wolfe Research downgrades several trucking sector stocks

Wolfe Research downgraded several trucking stocks Friday after their analysts revealed concerns over spot rates, according to Seeking Alpha. Wolfe recently conducted a study that suggested pricing expectations are swinging lower.

The report pointed to ArcBest (NASDAQ: ARCB), Covenant Transportation (NASDAQ: CVTI), Landstar System (NASDAQ: LSTR), Werner Enterprises (NASDAQ: WERN) and Schneider National (NYSE: SNDR) as specific risks. Wolfe downgraded all five stocks from peer perform to underperform, according to Seeking Alpha.

ArcBest was down a staggering 11.55 percent at close of market Friday following the report. Covenant was down 5 percent, Schneider was down 3.82 percent, Werner was down 2.65 percent and Landstar was down 1.31 percent.

“We have not assumed a recession in our models but expect slower freight volume and pricing growth the next two years,” Seeking Alpha reports the Wolfe team wrote of the current freight cycle.

FreightWaves Senior Market Analyst Zach Strickland weighed in on why Wolfe may have decided to downgrade the stocks when they did.

“The freight market is starting to show some signs of softening off one of the most volatile periods in recent history,” Strickland said. “There have been significant increases to contract pricing in the past year that should provide a higher base than the previous 10 years for rates to fall back to, as it would be naive to think rates could increase at this pace for much longer.”

The following FreightWaves SONAR chart illustrates that softening.: