BofA Securities downgrades Schneider National on tariff uncertainty, demand concer

Investing.com -- Analysts at BofA Securities have downgraded their rating on Schneider National (NYSE:SNDR) to “neutral” from “buy” in a note dated Friday. 

This decision reflects concerns about softer demand due to tariff uncertainty, slowing consumer spending, and pressure on spot pricing.  

The analysts cited that Dry van spot linehaul rates fell to $1.50/mi this week, from $1.51. 

In conjunction with the rating change, BofA Securities has also lowered its price objective for Schneider National to $25, down from the previous $34. 

This revised target is based on 30 times the firm’s revised 2025 earnings per share estimate.  

BofA Securities has also revised its EPS estimates downward. The 1Q25 EPS estimate has been reduced by 32% to $0.11 from $0.17, the 2025 EPS estimate has been lowered by 20% to $0.85 from $1.05, and the 2026 EPS estimate has been decreased by 11% to $1.55 from $1.75. 

These adjustments reflect a more cautious outlook on the company’s earnings potential in the face of current market conditions.  

The analysts at BofA Securities are worried about freight volumes in light of tariff uncertainty. 

Schneider National typically anticipates freight strengthening as it exits the first quarter, but there are increasing concerns about muted volumes. 

This is in contrast to the returning seasonality the company noted in 4Q24. BofA Securities anticipates some Dedicated accounts transitioning to Schneider National’s Network (For-Hire) business as shippers seek to lower costs. 

The analysts believe that volumes have decreased in February and March as shippers are experiencing a slight freeze in demand in anticipation of increased tariffs. This decline aligns with a drop in the BofA Truckload Demand Indicator.  

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Within Schneider National’s business segments, BofA Securities has adjusted its outlook for the Truckload and Logistics segments. 

The target for the Truckload segment’s 1Q25/2025 adjusted Operating Ratio has been deteriorated (increased) to 98%/95.8% from the previous 96.5%/94.6% target. 

For the Logistics segment, the 1Q25e/2025e operating ratio (ex-fuel) target has been lowered to 98.0%/97.2% from 97.5%/96.7%. 

In contrast, BofA Securities has largely maintained its volume and yield targets for the Intermodal segment. 

The 1Q25 and 2025 adjusted operating income targets for Intermodal are $14 million and $78 million, respectively. 

This represents a year-over-year improvement in operating ratio (ex-fuel). BofA Securities projects a 4.0% year-over-year increase in 1Q25 Intermodal orders, accelerating from 3.3% in 4Q24, supported by highway share gains

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