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Transports (IYT) Set to Kick Off Q1 Earnings in the 'The Year of Transports' - Jefferies

April 10, 2013 1:43 PM EDT Send to a Friend
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Price: $74.77 +0.07%

Rating Summary:
    9 Buy, 14 Hold, 1 Sell

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    Up: 15 | Down: 16 | New: 67
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Analysts at Jefferies raised their price targets on a host of transport stocks Wednesday and said 2013 is still poised to be the "The Year of Transports!" Earnings season for the sector kicks off on Thursday with results from JB Hunt Transport Services Inc. (NASDAQ: JBHT).

Better than expected freight volumes and rates in January and February led to a solid rebound in the Dow Jones Transportation Average, which rallied from 800 basis points of underperformance in 2012 to 670 basis points of outperformance in 1Q:13.

March is slowing a little, but there is a silver lining analyst Peter Nesvold said. "Our unique diesel tracker had been suggesting a slowing of freight in March, although we discounted that reading based on the timing of year-ago comparisons. In hindsight, we should've stuck closer to our model, as it did flag the March slowdown several weeks before the moderation arose in other indicators. Nevertheless, there is a silver lining — our diesel tracker appears to have re-accelerated late in March and into early April. At least this year, it looks like March was in like a lamb, out like a lion."

Jefferies raised 1Q estimates by 2% on average, driven primarily by the upside surprise in freight volumes in January and February. The East Coast rails remain the firm's top picks.

PRICE TARGET HIKES:
Canadian National Railway (NYSE: CNI) (Underperform) from $84 to $85
Canadian Pacific Railway (NYSE: CP) (Hold) from $105 to $114
CSX (NYSE: CSX) (Buy) from $29 to $30
Norfolk Southe (NYSE: NSC) (Buy) from $86 to $90
Union Pacific (NYSE: UNP) (Buy) from $153 to $159

Sector ETF, iShares Dow Jones Transportation Average (NYSE: IYT), is rallying 1.7 percent Wednesday ahead of the start of earnings season.




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