Forward Air (NASDAQ:FWRD) faced a challenging day in the stock market, plummeting 25.2% on Friday after multiple analysts raised concerns regarding its massive $3.2B purchase of Omni Logistics. Stifel’s Bruce Chan was notably skeptical, transitioning his stance from Buy to Hold. He underscored the deal’s hefty price tag, the potential for equity dilution, and increased debt. Additionally, he pointed out that despite management’s optimistic outlook on cash earnings in the near future, the acquisition poses significant operational and financial risks, especially as Forward Air absorbs one of its key clients.
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Raymond James’ Patrick Brown and Wolfe Research’s Scott Group shared similar sentiments. Brown downgraded the stock, suggesting that the merger might complicate the company’s narrative and emphasizing the potential difficulties of uniting two large-scale transportation entities. Meanwhile, Group gave a grim perspective, reducing the stock’s rating and emphasizing the likely EPS dilution by 2024 due to increased interest expenses and a surge in share count.
A look at the past five trading days for FWRD stock highlights the level of impact today’s news had on it. Indeed, shares are now down 29.64% during this timeframe.
