Forward Air Corporation (FWRD) shares have fallen nearly 20% from their 52-week highs made in late September. In mid-October, the company reported third quarter revenue that rose 11.1% to $331.38 million – in line with consensus estimates – but earnings per share of 76 cents missed consensus estimates by four cents per share.
Analysts have expressed some concerns following the earnings miss. In late October, Stephens analysts downgraded the stock to Equal Weight from Outperform with a price target of $67.00 per share, citing rising purchased transportation costs as the company struggles to recruit owner-operator teams. These recruitment issues could limit operating leverage.
The good news is that incoming CEO Tom Schmitt could offer a clear path forward. According to Stephens analysts, the new CEO could bring a "fresh perspective and clear vision" to drive growth over the next three to five years. The analyst's $67.00 price target is also significantly higher than the current price of around $60.00 per share.
From a technical standpoint, Forward Air stock is nearing the completion of a bearish head and shoulders chart pattern. The relative strength index (RSI) appears a bit oversold at 37.75, but the moving average converge divergence (MACD) experienced a bearish crossover that could signal more downside ahead. With fundamental headwinds, these trends could send the stock lower.
Traders should watch for a breakdown from the head and shoulders neckline, which stands near S2 support at $56.90. A breakdown from these levels could lead to a move to retest 52-week lows at $51.00 or move even lower. If the stock rebounds from these levels and invalidates the head and shoulders pattern, traders could see a move to retest highs at $72.81.
The author holds no position in the stock(s) mentioned except through passively managed index funds.