New US tariffs on imported medium and heavy-duty trucks are causing ripples in the transportation sector, and investors are keeping a close eye on Knight-Swift Transportation Holdings (KNX). The tariffs, set to kick in on November 1st, raise questions about how higher import costs and broader trade tensions could impact the company's future performance.
Knight-Swift: A Year of Ups and Downs
Despite the looming tariffs and market jitters, Knight-Swift's 1-year total shareholder return of -14.9% suggests a tough period for long-term investors. However, a recent 2.5% rebound in share price offers a glimmer of hope, though short-term momentum remains fragile. Currently priced at $42.73, investors appear cautious but are watching closely for any changes in sentiment as the industry adapts.
With the stock still down year-on-year and trading roughly 20% below consensus price targets, a key question arises: Is Knight-Swift currently undervalued, or have investors already priced in potential headwinds for the coming year?
The Undervaluation Narrative
Many believe Knight-Swift's fair value is significantly higher than its current price, suggesting potential upside. This view is supported by the company's ongoing expansion and integration of its LTL (less-than-truckload) segment. This expansion is driving shipment and customer growth, with expectations of significant operating leverage as new facilities and network investments mature. This, in turn, should support long-term revenue growth.
GXO Logistics: Analyst Updates
Meanwhile, Morgan Stanley has lowered its price target on GXO Logistics (GXO) from $60 to $58, while maintaining an Overweight rating. The analyst cites shipper uncertainty and low visibility as contributing factors, suggesting Q3 may be another “meh” quarter for the freight transportation group.
Other analysts are more bullish, with UBS raising its price target on GXO Logistics to $63 from $58. Goldman Sachs has also upgraded GXO to Buy, citing accelerating growth.
Key Takeaways for Investors
- New US truck import tariffs are impacting transportation stocks.
- Knight-Swift's performance has been mixed, but some analysts see potential undervaluation.
- GXO Logistics is receiving mixed reviews from analysts, with some lowering price targets and others upgrading the stock.
Investors should carefully consider these factors and do their own research before making any investment decisions.