Forward Air (NASDAQ:FWRD) -26.2% in Friday’s trading after at least three firms downgraded the stock on concerns that its $3.2B acquisition of Omni Logistics will add risks to the company’s business.
Forward Air (FWRD) is again a “show-me” story, Stifel’s Bruce Chan said in cutting shares to Hold from Buy, citing the deal’s “substantial” consideration, material equity dilution and significant debt.
“Management anticipates significant cash earnings accretion by year 2, but we see sizable execution risk and potential revenue dis-synergies as Forward ingests one of its largest customers,” Chan wrote.
Raymond James analyst Patrick Tyler Brown downgraded Forward Air (FWRD) to Market Perform from Strong Buy, saying the deal makes the investment story “significantly more complex.”
“The complexities of merging two large transportation companies may not be easy, and the value from synergy capture likely will prove a ‘show-me story,'” according to Brown.
Wolfe Research analyst Scott Group slashed the stock to Underperform from Peer Perform with an $80 price target, seeing the deal as “transformational” but with significant EPS dilution in 2024, based on much higher interest expense and a 60% increase in share count.
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