Old Dominion Freight Line is viewed cautiously at UBS
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UBS reeled in expectations on Old Dominion Freight Line (NASDAQ:ODFL) on Thursday after the company missed consensus estimates with its Q1 earnings report and warned on softness in the domestic economy.
Analyst Thomas Wadewitz said that despite rising cyclical pressures, Old Dominion (ODFL) is remaining disciplined on pricing. "Considering the significant cyclical pressure on tonnage, some softening in the LTL market pricing dynamic is unsurprising but we do not see it as an indication of a broader loss of industry discipline," he noted.
The firm kept a Neutral rating on ODFL in place and slashed its price target to $326 from $388. The new price target is based on applying a 28X P/E multiple to the lower 2024 EPS of $11.65 per share vs. $12.50 previously. Wadewitz and team believe concerns about the significant current weakness in freight activity could continue as a near term headwind, but we also believe that visibility is rising to ODFL being at a trough level of EPS in 2023 which could provide support.
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