UBS downgrades Knight-Swift, Schneider and J.B. Hunt on weak truck demand
Investing.com -- UBS downgraded Knight-Swift Transportation, Schneider National and J.B. Hunt Transport Services to Neutral, saying a rebound in U.S. truckload pricing is unlikely in 2026 as demand remains muted.
The bank said capacity is gradually leaving the market, but it does not see a clear driver for the mid-single-digit truckload contract rate increases that analysts had expected next year.
UBS now forecasts contract rates rising just 2% in 2026, with a stronger 7% increase pushed out to 2027.
That reset leaves its 2026 earnings estimates for the three carriers about 10% below Wall Street consensus.
UBS cut its 2026 earnings forecast for Knight-Swift to $2.15 per share from $2.90, for Schneider to $1.18 from $1.55, and for J.B. Hunt to $6.30 from $6.45, citing softer intermodal volumes in addition to weaker truck pricing.
The firm also downplayed the likelihood of Federal Reserve rate cuts spurring a near-term freight recovery.
While lower borrowing costs could boost freight-sensitive sectors such as housing and construction, UBS said the experience in 2024 showed that rate cuts may not reduce long-term yields if inflation and growth expectations remain elevated.
UBS rolled forward its valuation framework to 2027 earnings, applying multiples of 15 times for Knight-Swift and Schneider and 20 times for J.B. Hunt.
Analysts said those levels, slightly below mid-cycle, reflect that 2027 will be three years past the 2024 trough in truckload rates.
With limited upside of 5% to 15% over the next year, UBS said it no longer sees enough justification for Buy ratings on the three stocks.
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