On Monday, Expeditors International (NYSE:EXPD) of Washington, Inc. (NYSE:EXPD) experienced a downgrade in its stock rating. TD Cowen shifted its stance from a 'Hold' to a 'Sell' and also reduced the price target for the company's shares from $112.00 to $106.00.
"The outlook for EXPD has deteriorated in our view as exogenous factors propping the forwarding market have proven temporary with a short-lived port strike and adaptation to Red Sea congestion well underway at this stage," said the analysts.
With the resolution of these issues and an increase in ocean freight capacity, TD Cowen anticipates a return to pre-pandemic margin levels for Expeditors International.
The firm notes that despite shares of Expeditors International retracting gains from the anticipation of the East Coast port strike, investor expectations regarding sea-air conversions and a tightening air cargo market have been scaled back. The current market consensus for the company's EBIT in 2025 reflects a 3% increase, which TD Cowen views as overly optimistic. Instead, the firm's revised estimates suggest that Expeditors International will see flat year-over-year growth.
InvestingPro Insights
To provide additional context to TD Cowen's downgrade of Expeditors International (NYSE:EXPD), let's examine some key financial metrics and insights from InvestingPro.
Despite the downgrade, Expeditors International maintains some strong financial characteristics. According to InvestingPro data, the company has a market capitalization of $17.36 billion and a P/E ratio of 26.28. An InvestingPro Tip highlights that Expeditors holds more cash than debt on its balance sheet, which could provide financial flexibility in a challenging market environment.
Another positive aspect is the company's dividend history. An InvestingPro Tip notes that Expeditors has raised its dividend for 27 consecutive years, demonstrating a commitment to shareholder returns. The current dividend yield stands at 1.19%, with a 5.8% dividend growth over the last twelve months.
However, aligning with TD Cowen's concerns, Expeditors' revenue growth has been negative, with a -27.88% decline in the last twelve months. This supports the analyst's view of a return to pre-pandemic levels. The company's gross profit margin of 13.45% is also relatively low, which an InvestingPro Tip identifies as a weakness.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Expeditors International, providing a deeper understanding of the company's financial health and market position.
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