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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 (NYSE:MS) 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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