Forward Air Corp. (FWRD) shares sank 8.5% on Tuesday after the company dropped a double dose of bad news: one of its biggest customers might walk away, and its months-long search for a buyer came up empty.
The logistics company said a major customer — one that contributed roughly $250 million in revenue last year — is considering moving a significant chunk of its business to other providers. The transition would likely start in early 2027, but the mere possibility spooked investors. After all, losing a quarter-billion-dollar account is no small thing for a company that reported $582 million in first-quarter revenue.
That revenue figure was down from $613 million a year earlier, though the company did manage to narrow its net loss to $40.2 million from $61.2 million. Operating income jumped to $20.4 million from $4.8 million, and consolidated EBITDA came in at $70 million, representing a 12.1% margin. Liquidity improved to $402 million from $367 million in the prior quarter. But those operational wins were overshadowed by the customer risk and the failed strategic review.
Speaking of that review: Forward Air's board spent time exploring a potential sale of the company, but no actionable proposals emerged. So instead of selling the whole thing, the board will pursue sales of non-core assets, including the Intermodal segment and two smaller Omni Logistics businesses. The goal is to reduce leverage — the company's LTM net leverage ratio sits at 5.4x — and simplify operations.
Breaking down the segments: Expedited Freight revenue rose 9.4% to $273 million, with operating income up 28.2% to $20 million. Omni Logistics, on the other hand, saw revenue fall 6.5% to $302 million, though its EBITDA margin improved to 8.3% from 7.9%.
Short interest in Forward Air has actually fallen, from 4.27 million shares to 2.84 million in the latest reporting period. That suggests some bearish traders have closed their positions. Still, 13.47% of the public float remains short, and based on average daily volume of about 717,000 shares, it would take roughly four days to cover all short positions.
Technically, the stock is in rough shape. At $9.64, it's trading 51.3% below its 20-day simple moving average of $19.74 and 60.2% below its 200-day SMA of $24.19. The relative strength index (RSI) is at 25.79, which is firmly in oversold territory. That doesn't guarantee a rebound, but it does suggest the selling might be overdone in the near term.
Analysts, for what it's worth, still see value. The stock carries a Buy rating with an average price target of $24.00. Recent moves include Susquehanna lowering its forecast to $18.00 on May 8, and Stifel cutting to $30.00 on April 16 after raising it to $32.00 in January. Those targets imply significant upside from current levels, but they were set before the customer loss warning.
Forward Air shares were trading at $9.57 at the time of publication, down 8.51% on the day.
