Key Points
He downgraded his recommendation on its shares.
This came shortly after a major company announced an expansion of its transportation services.
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Saia (NASDAQ: SAIA) didn't take its investors for a pleasant ride this week. According to data compiled by S&P Global Market Intelligence, the trucking company's stock fell by nearly 13% over the period. Much of this was due to a recommendation downgrade from an analyst at a prominent bank.
Don't keep on trucking, analyst says
That pundit was Citigroup's Ariel Rosa, who set the tone for Saia stock on Monday with his adjustment. He now rates the company's equity neutral, one peg down from his previous buy rating. Despite the downgrade, Rosa adjusted his price target upward, to $524 per share from $516.
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According to reports, Rosa expressed concern not only about Saia but also about the broader trucking segment of the transportation sector. In his view, investors have become overly bullish on such companies, leading to inflated stock prices.
For Saia specifically, while the company has growth potential, it's difficult to justify such a rich price at the moment.
One tough competitor
Rosa's new take came shortly after Amazon announced last Wednesday that it is significantly expanding its less-than-truckload (LTL) service. This alone is a major competitive threat, and at a stroke, it made trucking and other transportation stocks look overvalued. I'd expect further downward price pressure in the sector, so I'd leave Saia and its peers alone these days.
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Citigroup is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
