Al Root
This is what happens when investors lose confidence in financial reporting.
Shares of freight broker and intermodal transportation company Hub Group were down 25% at $38.65 on Friday, while the S&P 500 and Dow Jones Industrial Average were up 1% and 1.6%, respectively.
The drop came after the company disclosed a $77 million error in its financial reporting that resulted in an understatement of its accounts payable and its costs for purchased transportation costs. The mistake didn't affect the company's cash flow or holdings of cash in any period, it said.
For context, Hub generates north of $150 million in operating profit annually. It reported 2025 sales of $3.7 billion, in line with Wall Street's expectations.
"Ill-timed, and immaterial to cash flow, accounting error masks strong top line [revenue]," wrote Evercore ISI analyst Jonathan Chappell on Friday. "It is impossible to estimate the impact to earnings per share.... we'll leave our EPS forecasts unchanged for the time being."
He rates shares Buy and has a $53 price target for shares.
Not everyone left their ratings unchanged. Stifel analyst J. Bruce Chan double-downgraded Hub Group to Sell from Buy and cut his price target to $27, down from $52. The accounting error could create a lower "jumping off point" for future earnings, he wrote.
Baird analyst Daniel Moore downgraded shares to Hold from Buy. His price target went to $29 from $47.
The new price targets work out to about 14 times estimated 2026 earnings. Hub Group was trading for about 22 times earnings heading into Thursday trading. It has traded for an average of about 16 times earnings over the past couple of years.
The current discount reflects investors' hatred of uncertainty.
Over the past few months, Hub Group stock had gone from roughly $35 to $50 a share, boosted by optimism for improving freight markets.
"Animal spirits" have been "unleashed," wrote Citi analyst Ariel Rosa in a Friday report about the sector. OK? Transport stocks have performed strongly, driven by improving industrial activity, higher freight rates, and strong earnings from the likes of XPO.
Still, Rosa is cautious. "Given the advance in share prices with accompanying valuation multiple expansion reaching historically-elevated levels, we are turning more cautious on truckers," he wrote.
He downgraded shares of Knight-Swift Transportation and Old Dominion Freight Line to Hold from Buy. He cut Werner and Schneider National to Sell from Hold.
Those four stocks trade for roughly 35 times estimated earnings expected over the coming 12 months, up from about 27 times a year ago.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 06, 2026 11:46 ET (16:46 GMT)
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