TFI International Faces Sector Headwinds as Scotiabank Moves to ‘Sector Perform’

The latest analyst action comes as a pivotal moment for TFI International Inc. (TFII), one of North America’s largest providers of transportation and logistics services. Scotiabank, a major force in Canadian capital markets and a respected name in transportation sector research, has downgraded TFI from ‘Sector Outperform’ to ‘Sector Perform’ as of July 10, 2025. With no updated price target provided and a stock that has corrected sharply from its 52-week highs, this move signals a pause in the previous bullish narrative. Understanding the context and implications of such a downgrade—especially from a heavyweight like Scotiabank—is essential for navigating the evolving landscape of the transportation sector.

TFI International operates a diversified suite of logistics, less-than-truckload (LTL), truckload, and package and courier services across the U.S., Canada, and Mexico. Its business model, focused on operational efficiency, disciplined capital allocation, and strategic acquisitions, has historically insulated it from the worst of cyclical downturns. However, as recent news and price action show, even industry leaders are not immune to macroeconomic and sector-specific pressures.

Key Takeaways:

• Scotiabank’s downgrade removes a bullish anchor for TFI, suggesting a more cautious sector outlook and prompting investors to re-evaluate risk.

• Stock price down nearly 41% from 52-week highs—from $158.93 to $92.86—despite recent signs of technical stabilization.

• Recent news highlights both strengths and uncertainty: a fresh quarterly dividend, strong cash flow, and a class action lawsuit add layers of complexity.

• Valuation reset and early recovery signals: TFI now trades near the 20-day EMA and below long-term VWAP, hinting at potential value but also underscoring caution.

• No new price target leaves potential upside or downside open-ended, amplifying the importance of sector and company-specific catalysts.

Dissecting the Downgrade: What’s Changed?

The Weight of a Scotiabank Downgrade

Scotiabank’s research arm carries significant influence in the Canadian equity landscape, especially in the transportation sector where it has maintained deep coverage and a track record of foresight. A shift from ‘Sector Outperform’ to ‘Sector Perform’ is not made lightly. While price targets were not updated, the move itself is a clear signal: after a period of sharp underperformance, the risk/reward profile for TFI International is now more balanced—at least in the eyes of a leading institutional player. This marks a notable change from earlier in the year, when TFI’s operational execution and cross-border expansion drew widespread analyst praise.

Why does this matter?
A downgrade from a top-tier firm often triggers broader institutional rebalancing. For TFI, whose shareholder base includes both U.S. and Canadian institutional investors, the downgrade may reduce short-term buying support—even as the company’s fundamentals remain resilient. The timing is notable: TFI’s stock has only recently begun to stabilize after a steep drawdown, and the downgrade reflects both macro headwinds and a more sober view on near-term sector catalysts.

“TFI’s diversified business model has historically enabled it to outperform peers in periods of volatility. However, the combination of soft freight demand and sector-wide cost pressures warrants a more neutral stance until clearer signs of recovery emerge.”

— Analyst note, Scotiabank (July 2025)

Stock and Financial Performance: A Story of Correction and Resilience

TFI’s stock is currently trading at $92.86, down from a 52-week high of $158.93—a staggering 41% retracement. The past year has seen 114 up days and 134 down days, with a sentiment ratio below 0.5, reflecting a market that’s been more pessimistic than optimistic. The 20-day EMA and SMA hover around $90.75 and $90.62, respectively, while the most recent RSI reading of 59.86 signals neither oversold nor overbought conditions—suggesting technical neutrality.

Despite the price decline, some fundamentals remain robust. According to a recent Seeking Alpha analysis, TFI’s cash flow is strong, and prudent cost management is supporting ongoing operations. Expansion in the Truckload segment and ongoing acquisitions have partially offset weakness in LTL and Logistics. The company continues to generate attractive free cash flow, supporting a quarterly dividend of $0.45 per share, payable July 15, 2025.

However, clouds remain. The recent class action lawsuit, announced in May, could serve as an overhang and has likely contributed to investor caution. In aggregate, the combination of a sector downgrade, ongoing legal uncertainty, and lack of a clear price target leaves the risk/reward calculus in flux.

Table: One-Year Price and Technical Snapshot

Potential Upside: An Undefined Roadmap

Without a new price target from Scotiabank, the potential upside (or downside) for TFI International is difficult to quantify. The lack of explicit guidance may itself be a statement—reflecting either uncertainty over sector recovery timing or a belief that the stock, after a sharp correction, is now fairly valued relative to risk.

For investors, this open-endedness means that future upside will likely be determined by:

• Earnings momentum: Can TFI translate strong cash flow into renewed earnings growth as freight demand recovers?

• Legal overhang resolution: Will the class action lawsuit be resolved without material impact?

• Sector tailwinds: Is the worst of the freight recession behind, or do further macro headwinds loom?

With TFI trading near technical support and valuation multiples at multi-year lows, any positive surprise—earnings or otherwise—could catalyze a sharp recovery. Conversely, further sector disappointments could keep the stock rangebound.

Recent News and Sector Context: Dividend Strength, Lawsuit Overhang, and the Value Debate

• Dividend Declared: On June 16, TFI’s board declared a quarterly dividend, reinforcing financial stability and management’s confidence in cash flows.

• Seeking Alpha Bullishness: A June analysis highlighted TFI’s undervaluation, robust cross-border presence, and the potential for a technical rebound after recent price correction.

• Class Action Lawsuit: In May, Levi & Korsinsky notified shareholders of a class action, introducing an element of legal uncertainty that may weigh on institutional sentiment in the near term.

“Expansion in the Truckload segment and strategic acquisitions offset weakness in LTL and Logistics, enhancing business flexibility and cross-border advantage. Valuation has become more attractive after a significant price correction, with technicals showing early signs of recovery and new buying opportunities.”

— Seeking Alpha, June 7, 2025

Conclusion: Navigating Uncertainty—What Investors Should Watch

The Scotiabank downgrade of TFI International marks a strategic inflection point for both the stock and the broader transportation sector. While the company’s business model and cash generation remain sound, the combination of sector headwinds, legal uncertainty, and the withdrawal of a major analyst’s bullish stance argues for a more measured approach.

Investors should closely monitor:

• Upcoming earnings for signs of margin stabilization and demand recovery

• Any developments in the ongoing legal proceedings

• Sector-wide signals of freight demand normalization

• Potential for technical rebounds as TFI trades near support

With the outlook more balanced, TFI International transitions from a consensus outperformer to a battleground stock—one where catalysts, rather than momentum, will drive the next major move.