YRC Worldwide Inc. (YRCW) shares rose more than 10% during Thursday's session after an activist investor sought three seats on the board of directors. Barna Capital, which owns a 5.4% stake in YRC Worldwide, is seeking to replace three board members, saying that they have failed to improve operating results. While the investor has "complete trust" in the executive management team and believes that the company is on the right track for a turnaround, the firm would like to see some changes in middle and lower management.
Earlier this week, Moody's Investors Service downgraded the trucking company's Corporate Family Rating to Caa1 from B2, the Probability of Default Rating to Caa1-PD from B2-PD, and the senior secured rating to B1 from Ba2. The ratings agency cited the expected impact of the COVID-19 crisis and the broad deterioration in credit quality that it has triggered. Trucking, freight, rail, and logistics stocks have suffered amid concerns that a dramatic slowdown in business activity could adversely affect their bottom lines.
From a technical standpoint, YRC Worldwide stock rebounded from 52-week lows made earlier this week toward its upper trendline resistance. The relative strength index (RSI) remains neutral with a reading of 44.23, while the moving average convergence divergence (MACD) could see a bullish crossover. These indicators suggest that the stock could have room to run.
Traders should watch for an ongoing breakout toward upper trendline resistance at $1.75 over the coming sessions. If the stock breaks out from those levels, traders could see a move toward the 50-day moving average that's currently around $1.95. If the stock moves lower, traders should look for strong trendline support at around $1.25 per share.
The author holds no position in the stock(s) mentioned except through passively managed index funds.