Some investors believe that the transportation sector has to be healthy for the stock market to remain strong. After all, it’s those trucks, trains and planes that move all the goods around the country for shoppers. So what happens when the trucking freight carriers see a sectorwide downgrade with warnings of negative industry trends on the same day that the stock market hit all-time highs again?

Credit Suisse downgraded some of the truck freight carriers on Thursday, July 11, 2019. The firm’s Allison Landry and Samantha Yellen see substantial risks around the earnings per share for the second half of 2019 and into 2020.

The call points out weakening demand backdrop and contract truckload rates turning negative, and Credit Suisse sees anecdotal evidence that suggests trucking capacity remains relatively loose. On average, Credit Suisse has cut earnings expectations by about 9%, and its 2020 earnings per share estimates are now about 6% below the consensus estimates.

Werner Enterprises Inc. (NASDAQ: WERN) was downgraded to Underperform from Neutral, and its price target was cut to $29 from $33 in the call. Werner shares were last seen trading down 3.2% at $29.90, in a 52-week range of $27.27 to $42.80.

J.B. Hunt Transport Services Inc. (NASDAQ: JBHT) was cut to Neutral from Outperform and its target was cut to $95 from $112. Its shares were last seen down 1.1%, at $86.66 in a 52-week range of $83.64 to $129.90.

Schneider National Inc. (NYSE: SNDR) was downgraded to Neutral from Outperform and the price target was cut to $19 from $23. The stock was trading down 3.6% at $16.63 on Thursday morning, in a 52-week range of $16.61 to $28.46.

Old Dominion Freight Line Inc. (NASDAQ: ODFL) was downgraded to Neutral from Outperform, and Credit Suisse thinks it’s time for a breather and pointed out it would be more negative if not for the stock having somewhat of a reasonable valuation. The firm lowered its target to $152 from $163. Shares of Old Dominion were trading down 1.3% at $140.71 on Thursday, in a 52-week range of $115.00 to $170.22.

The sector call noted that trucking contract rates are under pressure and that margin pressure likely will press on. The Credit Suisse report said:

Spot rates have continued to fall in 2019 after hitting record levels in 2018. Given that spot rates typically lead contract pricing, we believe the truckload carriers have had less negotiating power through the bid season, which will likely result in negative contract rates in the second half of 2019. Moreover, with less demand and more capacity in the market, carriers cannot be as picky with freight. This means that margins come under pressure as well since carriers have to move loads that are less profitable or don’t fit into the network as well (unless carriers hold strong on price… which then means a more dramatic drop off in volumes, and less operating leverage).

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