BofA downbeat on Old Dominion stock amid mixed performance

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BofA downbeat on Old Dominion stock amid mixed performance
Credit: © Reuters.

On Wednesday, BofA Securities adjusted its stance on Old Dominion Freight Line (NASDAQ: ODFL ), downgrading the stock from Buy to Neutral. The firm also increased the price target slightly to $446.00, up from the previous target of $443.00. This change follows the company's mid-first quarter update, which showed a mixed performance in its Less-than-Truckload (LTL) segment.

Old Dominion Freight Line reported a 1.2% rise in LTL Revenues per Day for February, a turnaround from the 2.7% decrease experienced in January. This resulted in an average decrease of 0.8% for the first quarter to date (1QTD). Despite these figures, the performance fell short of BofA Securities' initial estimates, which anticipated a 4.3% increase for the first quarter, now adjusted to 1.7%.

The company's LTL Tons per Day saw a year-over-year decline of 3.0% in February, which was an improvement compared to the 5.0% drop in January. The average decline for 1QTD stood at 4.0%, contrasting with BofA Securities' earlier estimate of a 0.9% increase, which has now been revised to a 3.4% decrease. The report also noted that the Weight per Shipment decreased by 3.2%, averaging a 3.0% decline for 1QTD. BofA Securities projects this figure to remain consistent for the entirety of the first quarter.

In contrast to the volume trends, LTL yields surpassed projections due to the company's continued pricing discipline. Revenue per Hundredweight (cwt) and Revenue per cwt excluding fuel costs, increased by 3.7% and 7.1% year-over-year, respectively, for 1QTD. These figures are higher than BofA Securities' estimates, which were 2.2% and 6.0% respectively, and have now been updated to 4.1% and 7.3% for the first quarter.

The report concluded with the February all-in Revenue per cwt growth at 4.6% year-over-year, an improvement from the 2.7% growth in January. Additionally, the Revenue per cwt excluding fuel costs for February showed a 7.5% increase year-over-year, up from 6.7% in the previous month.

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