Wachovia Downgrades Heartland Express (HTLD) to Market Perform

March 31, 2008 8:16 AM EDT

Wachovia downgrades Heartland Express (Nasdaq: HTLD) from Outperform to Market Perform.

The firm said it downgraded shares of Heartland as the Company has a large amount of exposure to auction-rate securities compared to its peers. At the quarter ended December 31, 2007, Heartland held about $188.7 million (~$1.97 per share) in short-term investments, or about 35.8% of its total assets.

The majority of these investments were made in student loan educational bonds at auction-rate levels . During February, Heartland experienced about $110 million in unsuccessful auctions for these auction-rate securities.

Although Wachovia doesn't see these concerns surrounding auction-rate securities as meaningful enough to constrain truck profitability, but believes the development could create a large headwind due to Heartland's larger-than-usual holdings of auction-rate securitiies.

Heartland Express, Inc., together with its subsidiaries, operates as a short-to-medium haul truckload carrier of general commodities in the United States. [BCS]

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