U.S. Xpress Enterprises downgraded to "hold" on valuation

U.S. Xpress Enterprises (Nasdaq: XPRSA) was downgraded today by Stifel Nicolaus to a “hold” rating from “buy” based on valuation and lack of upside.

Given that U.S. Xpress shares closed Monday at $19.89, right below the tender offer price of $20.10 offered by New Mountain Lake Acquisition Company for U.S. Xpress, Stifel Nicolaus analyst John Larkin said he thinks there is no longer any upside for the stock.

New Mountain Lake Acquisition Company, the subsidiary of U.S. Xpress founders Max Fuller and Patrick Quinn, originally made a buyout bid for U.S. Xpress of $20 on June 22 and on Sept. 10 increased the bid price to $20.10 per share.

Larkin said he thinks the Street has priced the bid into the stock price, signaling that traders perceive there’s a high probability the deal will close.

“We continue to expect the transaction to close at the proposed tender offer price of $20.10,” Larkin wrote in a research note today.

In order for the deal to close, the financing has to close and 90% of the total outstanding shares need to be tendered. At the current time financing for the deal is secured by a commitment letter from SunTrust Bank and SunTrust Robinson Humphrey and Fuller and Quinn own roughly 42% of outstanding shares.

Shares of U.S. Xpress (XPRSA) edged down $0.09, or 0.45%, to $19.80 at 12:24 p.m. ET. Shares of U.S. Xpress have been trading in the range of $13.10 to $27 for the past 52 weeks.

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