Knight-Swift Transportation (NYSE:KNX) still has the confidence of sell-side analysts despite missing profit expectations for the fourth quarter.
Shares of the transportation company rebounded sharply on Friday despite declining revenue and a sharper than expected contraction in profits. Shares rose nearly 7% at an intraday high as analysts advised investors to look beyond the quarter and to guidance, which many view as a signal that the bottom is in.
“We had expected a tough quarter for KNX in 4Q but it turned out to be much tougher than we had expected,” Morgan Stanley analyst Ravi Shanker commented. “The silver lining is that 4Q/1Q is likely to represent trough earnings and based on the FY23 guide it looks comfortably above the $4 bogey, if not higher.”
He reiterated his Buy rating and assigned the stock an $88 price target.
These sentiments were echoed by analysts at both Stifel and Bank of America, where the guidance was characterized as allowing investors to breathe a “sigh of relief” that an inflection is on the way. Both reiterated Buy ratings on the stock as well.
“With building free cash flow, the company could re-engage in accretive M&A (an opportunity given smaller carrier cost pressures and KNX’s integration track record) or larger buyback,” Bank of America’s Ken Hoexter added.
Shares of Knight-Swift (KNX) sustained about a 2.5% gain into Friday’s trading day.
Read more on the initial earnings result.