Today, the 25-day quiet period expired for recent IPO U.S.
Xpress (USX 15.60, -0.17, -1.08%), the fifth largest truckload carrier in the United States. As we
discuss in more detail below, analysts were decisively bullish on the stock,
giving price targets considerably above where shares are currently trading.
Simply put, USX got off to a dreadful start. Its 18 million share IPO priced below expectations at $16 vs. the $18-$20 range. Then, the stock nose-dived over the first couple weeks of trading, sinking to a low of $12.67 on June 27. However, since then, the stock has been red-hot, dramatically reversing course in late June and early July. In fact, USX has now erased nearly all of those losses as it closes in anew on its IPO opening price of $16.30.
Given the magnitude of this recent surge higher, it doesn't necessarily come as a surprise that the stock isn't seeing a more significant move today, noting the bullish initiations. The good news, though, is that sentiment and momentum are both in USX's corner at the moment, which could ultimately result in an upward trend for the stock.
As for the company itself, as noted above, USX is one of the largest trucking companies in the country. As of March 31, 2018, its fleet consisted of approximately 6,800 tractors and approximately 16,000 trailers, including approximately 1,300 tractors provided by independent contractors. Based in Chattanooga, it primarily focuses on servicing the densely populated and economically diverse eastern half of the United States.
Some investors may already be familiar with the company’s name because it was previously a publicly traded company before being taken private in 2007. Over the past few years, USX has made some strategic changes. For instance, historically, the company focused primarily on scaling its fleet and expanding its service offerings to support sustainable, multi-faceted relationships with customers. Now, however, it has turned to focusing on strengthening its core service offerings and refining its network to focus on shorter, more profitable lanes with more density, which it believes are more attractive to drivers.
Also, USX has recruited and developed new executive and operational management teams with significant industry experience and instilled a new culture of professional management. These changes, which are ongoing, helped the company to maintain relatively stable profitability during the weak truckload market of 2016 and early 2017 and to drive significant improvements to profitability during the strong truckload market beginning in 2H17.
Its customer list is diverse and includes many large, stable companies such as Amazon, Target, Home Depot, Dollar General, Dollar Tree, Kroger, Procter & Gamble, FedEx,Tractor Supply, and Walmart.
Circling back to this morning's initiations, each of the five we have sees hit the wires so far are bullish. Tier one firm Morgan Stanley initiated the stock with an Overweight. Another stand-out was Stifel's Buy and $22 price target -- 40%+ higher from the current price. In its note, Stifel commented that it believes the valuation is compelling and that USX should outperform its peers over the next year if it can execute anywhere near its internal targets.
Rounding off the list was an Overweight at JP Morgan ($20), Outperform at Wells Fargo ($21), and Buy at BofA Merrill Lynch ($20).
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