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Heartland Express Shares Fall On Downgrade

The Associated Press

NEW YORK (AP) — Shares of Heartland Express Inc. tumbled Monday amid a broader market sell-off after an analyst downgraded the trucking company's stock saying it's too expensive to justify a "buy" rating.

Longbow Research analyst Lee Klaskow cut the stock to "neutral," saying the shares do not have much room to grow after coming close to his $17 price target during Friday's session.

The stock has risen about 38 percent since early March, outpacing the Standard & Poor's 500 index by about 9 percent, he noted.

Trucking shipments have been shrinking across the industry due to the recession. But stocks took an upward turn last month as some investors believed demand had bottomed. Klaskow noted trucking companies have said that demand declines over the last few weeks of March have moderated in April, but warned that the sector isn't out of the woods yet.

"We still believe it is too early to uncork the champagne since it is off levels which have been noted as one of the worst operating environments, according to a number of our industry contacts," he wrote in a client note. "Driving this has been the issue of excess capacity that continues to plague the industry, which is putting pressure on pricing and margins."

Although it is unclear when shipments will pick, Klaskow said he still recommends investors buy up shares of Heartland on a pull back in price, calling it one of the better-managed truckload operators.

The stock fell $1.73, or 10.5 percent, to $14.77 in late trading. Shares have traded between $11.89 and $20 in the past year.