Cautious Outlook for Knight Transportation Amid Rate Pressures and Network Expansion Costs

Knight Transportation (KNX – Research Report), the Industrials sector company, was revisited by a Wall Street analyst today. Analyst Ken Hoexter from Bank of America Securities reiterated a Hold rating on the stock and has a $47.00 price target.

Ken Hoexter has given his Hold rating due to a combination of factors affecting Knight Transportation’s performance. The company’s second-quarter earnings per share estimates have been reduced by 9%, primarily due to pressures on trucking rates and less-than-truckload (LTL) margins as the company expands its network. This expansion has led to cost pressures that are expected to impact the operating ratio negatively.
Additionally, while Knight Transportation aims to improve utilization by reducing unseated truck counts, the company has not yet seen significant impacts from tariff-driven import changes. The trucking revenue per mile is expected to remain flat, with contract rate improvements being offset by ongoing spot rate weaknesses. These factors, combined with regional rate softness, have led to a cautious outlook, resulting in the Hold rating and a slight reduction in the price objective from $48 to $47.