By Ben Glickman
Shares of Forward Air sank after its acquisition of Omni Logistics prompted ratings cuts by analysts.
The stock was down 27% to $76.21 in Friday trading, reaching a low of $75.23, its lowest price since February 2021. Shares have fallen 28% so far this year.
The less-than-truckload and other distribution services company said it would acquire Omni, a logistics and supply-chain management group, for $150 million in cash and Forward common and preferred stock. The deal is expected to close in the second half of the year.
After the deal was announced, several analysts downgraded the stock. Analysts with Stifel downgraded the stock to hold from buy, citing concerns that Forward had paid a large premium for the acquisition and there were major execution risks.
Patrick Tyler Brown and David Hicks, analysts with Raymond James, downgraded the stock to market perform from strong buy. They said the deal complicated Forward’s story, adds lots of leverage to the balance sheet and doesn’t contribute to earnings in the near term. They say the company is now a “show-me” story.
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