Benchmark Co. analyst Christopher Kuhn has maintained their neutral stance on FWRD stock, giving a Hold rating on May 9.
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Christopher Kuhn has given his Hold rating due to a combination of factors influencing Forward Air’s current financial and operational status. The company is in the midst of integrating Forward and Omni, aiming to streamline operations and double its revenue over the next five years. However, the focus on expanding revenue is seen as premature given the need to first address profitability issues within the existing business structure. Although there has been a notable improvement in the Expedited Freight segment, which saw a significant increase in EBITDA margin, the overall profitability remains below pre-COVID levels.
Moreover, while the company maintains a decent covenant cushion, there are concerns about the potential reduction in this cushion if demand does not improve in the upcoming quarters. The lack of forward guidance further complicates forecasting, making it challenging to predict future performance. Additionally, the company’s diverse product segments show varying levels of stability, with some areas like the Air and Ocean segment being more volatile. These factors combined lead to a cautious outlook, justifying the Hold rating as more evidence of sustained improvement is needed before a more positive recommendation can be made.
Kuhn covers the Industrials sector, focusing on stocks such as XPO, Old Dominion Freight, and Saia. According to TipRanks, Kuhn has an average return of 3.3% and a 40.22% success rate on recommended stocks.
In another report released on May 9, Stifel Nicolaus also maintained a Hold rating on the stock with a $21.00 price target.