Expeditors International of Washington's (EXPD) earnings growth is expected to be modest, with a 5% increase in 2026, leading to a cautious outlook for the stock, BofA Securities said in a note Friday.

Falling container shipping rates are likely to hurt freight forwarders like Expeditors, as asset-based liner companies use lower prices to gain market share, the investment firm said.

Q2 volumes are expected to be flat, with ocean revenue per container slot down 10% year-over-year if rates stay at 1400 Shanghai Containerized Freight Index levels, BofA said.

The company's stock has risen 16% since April but shy of the S&P 500's 26% increase, according to the note.

Although Expeditors usually benefits from market volatility and trade barriers, current demand remains muted than expected, with China-to-US shipping volumes falling by 5.6% in May, according to BofA.

BofA Securities downgraded the company's stock to underperform from neutral and raised its price target to $118 from $117.

Shares of the company were down about 2.6% in recent trading.

Price: 116.18, Change: -3.07, Percent Change: -2.57