ArcBest’s Financial Struggles: Sell Rating Amid Low-Margin Shift and Pricing Pressure

Analyst Ken Hoexter from Bank of America Securities reiterated a Sell rating on ArcBest (ARCB – Research Report) and decreased the price target to $63.00 from $67.00.

Ken Hoexter has given his Sell rating due to a combination of factors affecting ArcBest’s financial performance. The company reported better-than-expected volume growth, particularly in April and May, but this was offset by yields that fell short of targets. This discrepancy suggests a shift towards lower-margin transactional and spot business to utilize excess capacity, which is not favorable for long-term profitability.
Additionally, ArcBest’s Asset-Light segment faced significant revenue declines, although there was a slight improvement in operating profit expectations. Despite these challenges, the pricing environment remains rational, but ongoing softness in key sectors like manufacturing and household goods continues to pressure the company’s performance. Consequently, Hoexter lowered the price objective to $63, reflecting concerns over pricing pressure and the shift to low-margin freight, which weigh on the stock’s potential.

Hoexter covers the Industrials sector, focusing on stocks such as CSX, XPO, and ArcBest. According to TipRanks, Hoexter has an average return of 1.5% and a 48.59% success rate on recommended stocks.