Investing.com -- Morgan Stanley upgraded Saia (NASDAQ:SAIA) Inc to Equal Weight from Underweight, saying a reset in earnings expectations has returned the stock to fair value following a significant first-quarter miss.

The firm lowered its price target to $250 from $275, noting that Saia’s first-quarter operating ratio is now considered a new baseline and that the post-Yellow Corp bull case that drove recent optimism is likely over for now.

"We believe this is more structural than cyclical," Morgan Stanley said, adding that the stock’s sharp pullback reflects more balanced risk-reward.

Saia had been a key beneficiary of capacity dislocations after Yellow’s collapse, but Morgan Stanley said structural headwinds may now be emerging.

These include truckload-to-LTL conversion, increased competition from parcel carriers, and more aggressive pricing by rivals.

While broader macro conditions remain challenging, the firm pointed to industry dynamics that could pressure Saia beyond a simple cyclical downturn.

Following the earnings reset, Morgan Stanley expects consensus estimates to fall sharply, limiting further downside unless a recession materializes.

Its updated EPS forecasts for Saia are $11.36, $13.95, and $15.72 for 2025, 2026, and 2027, down from previous estimates and below current Street expectations.

Despite longer-term optimism for freight, Morgan Stanley urged caution in assuming a rapid earnings recovery.

Concrete evidence in the upcycle would be needed to justify re-rating, the firm said.

Saia shares had surged more than 125% from April 2023 highs during the post-Yellow rally but have since fallen back toward pre-Yellow levels.

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