Susquehanna sees abundant opportunity in logistics and trucking
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Despite underwhelming returns as of late and late-cycle fears, Susquehanna analyst Bascome Majors is voicing bullishness on the road ahead for trucking and logistics names.
In a sweeping upgrade note, Majors moved his ratings upward to positive for J.B. Hunt Transport (NASDAQ:JBHT), Hub Group (HUBG), Werner Enterprises (WERN) while assigning positive initial ratings to Knight-Swift Transportation Holdings (KNX), TFI International (TFII), Schneider National (SNDR), XPO Logistics (XPO), Forward Air Corporation (FWRD), Saia, Inc. (SAIA), and GXO Logistics (GXO). Though it is worth noting, his rating remained Neutral on Landstar System (LSTR), CH Robinson Worldwide (CHRW), and Old Dominion Freight Line (ODFL).
âIn early March, we upgraded asset-based truckload carriers [Knight-Swift Transportation Holdings] (KNX) and [Schneider National] (SNDR) on our view that a freight recession was already more than priced in,â Majors explained. âBut since then most trucking-related transports continued to underperform as the trade press and Twitter amplified sub-seasonal near-term supply/ demand trucking trends into mainstream macro concerns.â
He advised clients that the broad swath of the sector should be bought as a recent selloff has prompted a particularly attractive risk/reward profile. Majors added that the larger players in the industry are most attractive amid external pressures.
âWhile all of trucking will feel some degree of cyclical reversal from these conditions, we fully expect the fallout from this âbloodbathâ to be concentrated among smaller carriers,â Majors advised. 
He noted that the smaller carriers are comparatively overextended on peak equipment purchase prices and reliant on brokers who pay via volatile spot rates. 
âFor the stocks, we firmly believe this selloff creates attractive risk/reward opportunities in buying transports already priced for a freight recession, particularly after trucking names just delivered their worst performance into a negative spot rate inflection in at least the last decade,â Majors concluded. 
As such, he sees significant earnings growth among many of the names and a number of undervalued names in the space. 
Read more on recent results from J.B. Hunt (JBHT) indicating resilience amid supply chain shocks.