Analysts Raise TL, LTL Estimates Ahead of Q2 Earnings Season

Equity analysts at major investment banks are raising earnings expectations for truckload (TL) and less-than-truckload (LTL) carriers heading into second-quarter earnings season, citing a tightening capacity environment and improving pricing dynamics. Deutsche Bank's Richa Harnain forecasts median EPS growth of 15% year-over-year for Q2 and 21% for Q3, representing a marked acceleration from the 3% growth recorded in Q1 and the 7% decline in Q4. LTL carriers are expected to lead the recovery, with Harnain's forecasts sitting 5% above consensus on average. The bullish outlook reflects multiple positive indicators: six consecutive months of positive manufacturing data, two-year-positive tonnage trends in May (on stacked comparisons), and sustained mid-single-digit contractual rate increases despite excess door capacity.

General rate increases are accelerating, and LTL fuel surcharge programs are becoming more profitable as fuel costs rise. Combined with cost optimization initiatives powered by AI and network improvements, carriers are poised to restore margins significantly. However, both Deutsche Bank and Morgan Stanley flag valuation concerns. While fundamentals are genuinely strengthening, trucking stocks are up 40-50% year-to-date with multiples stretched relative to historical averages.

Morgan Stanley downgraded its sector view from "attractive" to "in-line" and reduced ratings on Old Dominion, J.B. Hunt, and Landstar, though analysts remain convinced the industry is entering "the biggest upcycle ever" in coming quarters.