Shares of YRC Worldwide Inc. surged Tuesday after a Wachovia Capital Markets analyst upgraded the stock, saying the nation's largest publicly traded trucker may not be in as much immediate financial trouble as some believe.Analyst Justin B. Yagerman lifted the stock to "Market Perform" from "Underperform," noting that some investors' pessimism seems "overblown." Yagerman expects a proposed 10 percent union wage cut to be approved this week. Ballots were collected this morning, but International Brotherhood of the Teamsters spokesman Bret Caldwell said he expects them to be counted and validated Wednesday.
Yagerman also noted that the company is working to amend its credit agreement with lenders.
These factors combined lessen the immediate risk the company would file for bankruptcy or take other drastic financial measures to preserve cash, he said.
But the analyst warned that he still does not recommend investors buy shares of the trucking company. He suggests that pessimism surrounding the stock will lessen, though, once the wage reduction is approved. Yagerman noted that Teamsters workers will most likely concede to the wage reduction because of bankruptcies at other trucking companies and few opportunities elsewhere in freight transportation because of the weak economy.
In afternoon trading, shares of YRC rose 96 cents, or 26 percent, to $4.68. The stock has traded as low as $1.20 and as high as $22.52 in the past year
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