TFI International's (NYSE: NYSE:TFII) stock price target was lowered to $171 from $180 by TD Cowen, although the firm continues to recommend buying the shares.
The adjustment follows TFI International's third-quarter performance, which fell short of expectations due to operational ratio (OR) pressures from pricing challenges and service issues.
The company's goal of achieving a 90 OR in the fourth quarter is now seen as unlikely, leading to a reduction in the earnings per share (EPS) guidance.
The weaker market conditions have prompted management to adopt a more cautious stance for the year 2025, setting an EPS anchor point that is significantly below the consensus.
Despite the near-term headwinds, TD Cowen believes that TFI International's long-term growth potential remains supported by its strategic approach to acquisitions. The firm anticipates that a substantial deal will materialize towards the end of 2025 or the beginning of 2026, which should contribute to the company's growth trajectory.
In other recent news, TFI International reported a 17% increase in Q3 revenue, totaling $1.9 billion. The company's free cash flow also rose by 37% to $273 million, contributing to a $130 million debt reduction in the same quarter.
The operating income for the period reached $203 million, with a margin of 10.7%. Susquehanna recently cut TFI International's target to $170, maintaining a positive stance, while Citi and Stifel adjusted their price targets and ratings.
Notably, Neil Manning, an independent director, retired from TFI International's board after 11 years of service. Despite ongoing market challenges, TFI International anticipates a stable performance for 2024, with potential improvements in 2025 if market conditions normalize.
InvestingPro Insights
TFI International's recent challenges, as highlighted by TD Cowen's analysis, are reflected in some of the current financial metrics and expert insights from InvestingPro. Despite the lowered price target, the company's fundamentals suggest a mixed but potentially resilient outlook.
According to InvestingPro data, TFI International boasts a market capitalization of $11.5 billion and a P/E ratio of 24.52, indicating that investors are still willing to pay a premium for the company's earnings. This is further supported by an InvestingPro Tip noting that analysts predict the company will remain profitable this year, aligning with TD Cowen's long-term optimistic view.
The company's revenue growth of 10.38% over the last twelve months and a quarterly growth of 14.31% in Q3 2024 demonstrate its ability to expand even in challenging market conditions. This growth is complemented by a solid EBITDA of $1.13 billion, reflecting the company's operational efficiency.
An InvestingPro Tip highlights that TFI International has maintained dividend payments for 23 consecutive years and has raised its dividend for 3 consecutive years. This consistent dividend policy, coupled with a current dividend yield of 1.18%, may appeal to income-focused investors despite the near-term headwinds mentioned in the article.
For readers interested in a deeper analysis, InvestingPro offers additional tips and insights, with 8 more tips available for TFI International on the platform.
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