UBS Remains Sidelined as Swift Transportation's (SWFT) New Outlook Underlines Weak Freight Environment
UBS reiterated a Neutral rating and $16.00 price target on Swift Transportation (NYSE: SWFT) following the company's 3Q15 earnings results. SWFT reported 3Q15 adjusted EPS of $0.31/share which was in-line with SWFT's pre-report guidance and slightly below Consensus of $0.32/share. In response to what SWFT is characterizing as a weaker than expected freight environment, they are cutting net capex for 2015 from $350 mm - $375 mm to $275 mm to $300 mm. The primary driver of this cut is a reduction in their fleet growth plan from 700 – 1100 tractors to a range of 500 – 600 tractors.
Analyst Thomas Wadewitz commented, "On Monday night SWFT reported 3Q15 adjusted EPS of $0.31/share which was in-line with SWFT's pre-report guidance and our estimate and slightly below Consensus of $0.32/share. The combination of $0.07/share from adverse development of prior year insurance and workers comp claims and a $0.02/share charge for settlement of a class action suit were meaningful contributing factors to the 20% y/y decline in EPS. Adding back these two items results in about 3% y/y EPS growth in 3Q. Likely more important to the stock were SWFT's comment about a weaker freight environment than they expected and their resulting action to cut their fleet growth plan by 40%."
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Shares of Swift Transportation closed at $14.88 yesterday.