- Knight Transportation (KNX +3%) is upgraded to Outperform from Neutral with a $36 price target at Baird following last week's announcement of its merger deal with Swift Transportation (SWFT +4%) that heralds a "new era of truckload."
- KNX has given back nearly all of its outperformance immediately following the merger news on April 10, but given the pullback, along with resetting estimates, Baird believes KNX's (and SWFT's) risk/reward is attractive at current levels.
- The firm also thinks a likely cyclical trough in truckload industry pricing growth during 2017 along with synergy from the merger supports accelerating EPS growth in 2018, presenting a fundamental catalyst to KNX-SWFT.