On Monday, Morgan Stanley (NYSE:MS) initiated coverage on Ryder Systems (NYSE:R), a leader in transportation and supply chain management solutions, with an Overweight rating and a price target of $165. The firm sees potential in the company's ongoing transformation, which has yet to be fully recognized by the market.
The new rating suggests confidence in Ryder's prospects, particularly as the industry approaches an upcycle. Morgan Stanley's outlook is bolstered by expectations of significant upside, which could surpass the consensus for the fiscal years 2025 and 2026. This optimism is based on several factors, including the anticipated cycle inflection, the impact of environmental regulations set for 2027, and the secular growth drivers for outsourcing.
The analyst at Morgan Stanley highlighted the company's recent efforts, stating, "Ryder hasn't gotten much credit for its transformation yet but we may not have to wait much longer, especially with the upcycle upon us." This transformation is expected to position Ryder favorably as it adapts to changing market conditions and regulatory landscapes.
The $165 price target represents a notable increase from current levels, indicating a belief in the company's ability to grow and adapt. The emphasis on Ryder's readiness for upcoming Environmental Protection Agency (EPA) regulations and the broader trend towards outsourcing in the logistics industry are key components of this positive outlook.
In other recent news, Ryder Systems, a transportation and logistics company, reported increased earnings and a robust balance sheet in the first quarter of 2024.
The company's performance was bolstered by strategic acquisitions, including Cardinal Logistics and Impact Fulfillment Services, despite facing challenges in the used vehicle sales and rental market. Financial services firm, Stephens, has raised Ryder Systems' stock price target to $120 from the previous $113, maintaining an Equal Weight rating. This decision followed the company's Q1 results that surpassed the conservative guidance provided earlier in the year.
However, Stephens expressed caution regarding the pursuit of the stock's recent gains due to uncertainties surrounding the used vehicle and rental market outcomes for the rest of the year. The company revised its full-year 2024 free cash flow forecast to negative $175 million to $275 million and raised its full-year 2024 comparable EPS and return on equity forecasts. Notably, Ryder Systems is scheduled to hold an Investor Day on June 13 in New York City.
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