In a report released yesterday, Fadi Chamoun from BMO Capital upgraded Old Dominion Freight to a Buy, with a price target of $170.00.
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Fadi Chamoun has given his Buy rating due to a combination of factors that highlight Old Dominion Freight’s strong positioning in the market. Despite the ongoing freight recession impacting results and share prices, the company has maintained its industry-leading service levels and pricing power. This discipline, along with its ample capacity to capitalize on recovery, positions Old Dominion Freight well for future growth. Additionally, the company’s robust free cash flow and significant share repurchases further enhance its potential for upside as the market cycle improves.
Another key factor in Chamoun’s recommendation is Old Dominion Freight’s strong financial health, characterized by a zero debt balance sheet and a high return on invested capital even at the cycle’s low point. The company’s ability to convert free cash flow effectively and its strategic capital deployment, including substantial dividends and share buybacks, support its premium valuation. As demand recovers and growth accelerates, these elements create a favorable risk/reward balance, justifying the Buy rating.
According to TipRanks, Chamoun is a 5-star analyst with an average return of 13.9% and a 60.93% success rate. Chamoun covers the Industrials sector, focusing on stocks such as CH Robinson, Canadian National Railway, and Union Pacific.