Shares of Hub Group fell sharply, down 23% in premarket trading on Friday, after the company revealed an accounting error that understated costs and pushed back the release of its full fourth-quarter results. The disclosure has injected near-term uncertainty about earnings, margins and the starting point for future profitability.
Analysts at Stifel reacted by lowering their recommendation to Sell and cutting their price target to $27. The brokerage said Hub Group identified a $77 million understatement of purchased transportation costs and accounts payable covering the first nine months of 2025. Stifel indicated it expects the issue likely carries into the fourth quarter as well, which would reduce reported margins at the outset of coming years.
In revising its financial model, Stifel now points to a conservative 2027 earnings estimate of $1.75 per share and warned of downside risk from current market levels. The firm noted that while improving freight demand and management-led cost reductions could help a quicker recovery, it will await clearer evidence before adjusting its view.
Baird also moved to a more cautious stance, trimming its rating to Neutral from Outperform and establishing a $29 price target. That $29 target is approximately in line with Hub Group's reported book value at the end of the third quarter, the firm said, and the downgrade reflects the uncertainty surrounding pending financial restatements until the year-end audit is finalized.
Company acknowledgement and scope
Hub Group said the accounting error will increase purchased transportation and warehousing costs for the first three quarters of 2025 and that it plans to restate results for that period. The company has not provided a full estimate of the ultimate financial impact.
Management told analysts and investors that the issue is not expected to affect periods before 2025 and indicated that total cash and operating cash flows should remain unchanged. That description suggests the adjustment relates primarily to the timing and classification of costs rather than to actual changes in cash payments.
On volumes, Hub Group reported that intermodal volume rose 1% in the fourth quarter compared with the prior year. For 2026 the company provided a preliminary outlook, expecting revenue between $3.65 billion and $3.95 billion and capital expenditures of $35 million to $45 million.
Market and analyst implications
The combination of a material accounting understatement, delayed reporting and the need to restate prior quarters has prompted sell-side caution. Stifel and Baird both moved to more conservative ratings as they await the results of the year-end audit and clearer visibility on reported margins. The market reaction reflects investor concern about near-term earnings clarity and the potential for a lower margin baseline going forward.
What remains uncertain
Hub Group has not yet quantified the total financial impact of the restatement. The company also has not confirmed the full extent to which the understatement extends into the fourth quarter. Auditors and the company’s year-end review are expected to provide additional clarity, but until that process concludes, analysts and investors will face elevated uncertainty around reported profitability metrics.
Investors and market participants will likely treat upcoming audit findings and the timing of restated filings as key catalysts for reassessing earnings expectations and valuation.