Prepare to overweight transports as cycle inflects, says Baird

Baird analyst Garrett Holland told investors while 2022 was the year to discount recessionary freight trends, 2023 is likely one where investors position more for recovery. He believes sustained volatility should be a common thread though and that first half 2023 trends will likely remain challenging with weaker-than-expected demand driving the downside risk for estimates. However, spot market pricing should find equilibrium, and by 2H23, bottoming demand trends should be evident. He said top ideas for 2023 are Knight-Swift (KNX), Schneider National (SNDR), Werner (WERN), Hub Group (HUBG), and Jack Henry (JKHY).