Forward Air Stock Tumbles Following Acquisition Announcement

Forward Air, a provider of less-than-truckload logistics services, experienced a steep decline in stock value after announcing its acquisition of Omni Freight, a privately held company based in Dallas. On August 11, Forward Air stock (ticker: FRWD) plummeted by 25%, closing at $77.65. This news prompted Raymond James analyst Patrick Tyler Brown to downgrade shares to "Market Perform" from "Strong Buy". In a research report, Brown acknowledged the rationale behind the deal, as Forward Air aimed to combine high-service businesses with Omni's robust "commercial engine". However, Brown also noted that the merger of two large transportation companies could present challenges and that the expected benefits from synergy capture may take time to materialize. As a result, sentiment among investors is likely to be negatively impacted in the short term.

Despite the initial decline in stock value, insiders at Forward Air demonstrated confidence in the company's prospects by purchasing approximately $2 million worth of shares between August 17 and 18. Notably, Chairman, President, and CEO Tom Schmitt led the buying activity, acquiring 16,050 shares at an average price of $62.70 each, totaling $1 million. With this recent purchase, Schmitt's ownership of Forward Air shares now stands at 73,879, as reported in a filing with the Securities and Exchange Commission.

A Promising Future for Forward Air

"I have a ton of confidence in this company," expressed Schmitt in a recent phone interview. He firmly stated, "We believe we have a go-forward strategy."

While Schmitt chose not to suggest a specific fair value for Forward Air stock, he confidently stated, "Is it a $170 stock in a few years? Absolutely."

Discussing the bankruptcy filing of Yellow, another LTL shipper, Schmitt expressed sympathy towards the employees affected by the situation. He said, "A lot of good people worked their tails off there, and I hope they find a good, professional home. Many customers who once relied on Yellow have already found new homes, and we are proud to have become a new home for some former Yellow customers."

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