RBC has cut its target on TFI International to US$127, from US$156 after the company's fourth-quarter miss.

"We knew Q4 would be tough - but the magnitude of the miss was meaningful," notes analyst Walter Spracklin. Weakness was in all areas; but most prominent in the key LTL division.

RBC is adjusting its estimates to reflect a market trend that remains challenged in the first half of 2025, (similar to current trends) followed by improvement mid-year.

2025E lowered to $6.89 (from $7.79). 2026E EPS also adjusted to $8.33 (from the previous $9.68). Based on the significant reduction to EPS estimates, target has been cut to $127 (from $156).

Maintaining Outperform on the upside potential from a market recovery and potential M&A activity.

Despite a poor 2024, free cash flow remained solid at $769 million, resulting in debt leverage of 2.1x. The company has a balance sheet primed and ready to take advantage of M&A (large and small) when the right opportunities arise, Spracklin says. "We see this as key in achieving route density (via tuck-ins) and critical mass for a TL spin (via more significant M&A) that could prove to be an important catalyst, coming (potentially) this year."