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Ryder System Shares Fall On Downgrade

The Associated Press

NEW YORK (AP) — Shares of logistics and truck leasing company Ryder System Inc. fell sharply Monday after an analyst cut the stock to "hold," saying overall economic conditions should keep the stock from rising much in the near future.

Stifel Nicolaus analyst John Larkin said the stock is too expensive to justify his previous "buy" rating.

In a note to clients, Larkin said that while the Miami-based company has a strong management team and solid market position, he thinks the trucking industry will remain challenging at least through next year.

The analyst said he believes that weak pricing will continue to hurt the company's used-truck unit. Because there are still too many trucks competing for too little business, Larkin estimates that prices in the division are still down by double-digits compared with last year.

"Oddly enough, we believe it could be even worse, if some lenders were not so accommodating with carriers right now on the finance side," he said.

Larkin also said the company's commercial rental division "is not yet seeing any signs of life." And Ryder's supply-chain-solutions segment is still reeling from the troubles facing the U.S. auto industry.

Last month, Ryder said its first-quarter earnings plunged 88 percent as its fleet-management business was hit by slowing commercial rental and used vehicle sales.

The company predicted that business will be weak through the end of this year, and suspended earnings projections citing economic uncertainty.

Larkin said investors should pick up the shares again after they fall below $25.

In afternoon trading, the stock lost $2.57, or 8.6 percent, to $27.37. It has traded as low as $19 and as high as $76.64 in the past year.