Schneider National’s Strategic Expansion: The Impact of Acquiring Cowan Systems

Analyst Ken Hoexter of Bank of America Securities reiterated a Buy rating on Schneider National (SNDR – Research Report), boosting the price target to $38.00.

Ken Hoexter’s rating is based on Schneider National’s strategic acquisition of Cowan Systems, which significantly expands its dedicated fleet by 27%. This acquisition is anticipated to bolster Schneider’s Dedicated business segment, pushing it beyond $2 billion in revenue, while positioning the company to capitalize on Cowan’s robust business pipeline and established market presence. Furthermore, the deal is expected to deliver immediate accretion to earnings, even taking into account the increased interest expenses associated with the acquisition.
Hoexter acknowledges the favorable purchase price, approximately 0.34 times Cowan’s 2023 revenues, which aligns with high operating margins seen in similar businesses. This acquisition not only strengthens Schneider’s market position but also provides synergy opportunities, particularly in avoiding overlap with existing logistics operations. Consequently, Hoexter raised Schneider’s price objective to $38, reflecting his confidence in the company’s growth trajectory and its potential for EPS rebound after 2024.

In another report released yesterday, TD Cowen also reiterated a Buy rating on the stock with a $34.00 price target.

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Schneider National (SNDR) Company Description:

Schneider National Inc. provides transportation and logistics services. The firm’s transportation solutions include van truckload, dedicated, regional, bulk, intermodal, brokerage, supply chain management, port logistics services and engineering and freight payment services. It operates through the following segments: Truckload, Intermodal and Logistics. The Truckload segment consists of freight transported and delivered with standard and specialty equipment by employed drivers in company trucks and by owner-operators. The Intermodal segment consists of door-to-door container on flat car service by a combination of rail and over-the-road transportation, in association with rail carrier partners. The Logistics segment consists of non-asset freight brokerage services, supply chain services and import/export services. The company was founded by A. J. Schneider in 1935 and is headquartered in Green Bay, WI.