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UPDATE: Credit Suisse Downgrades C.H. Robinson (CHRW) to Underperform

October 30, 2014 8:25 AM EDT
Get Alerts CHRW Hot Sheet
Price: $73.38 -0.76%

Rating Summary:
    5 Buy, 23 Hold, 8 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 2 | New: 35
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(Updated - October 30, 2014 10:39 AM EDT)

Credit Suisse downgraded C.H. Robinson Worldwide (NASDAQ: CHRW) from Neutral to Underperform with a price target of $65. Analyst Allison M. Landry warned of secular pressures and commoditization in truck brokerage.

"We are downgrading our investment opinion of CHRW to Underperform from Neutral. We believe that secular changes underpinning both the truckload and brokerage industry, in conjunction with a structurally lower margin and return profile at CHRW, argue for slower EBIT and earnings growth going forward. By default, this sets the stage for multiple compression," said Landry.

"We believe that the structural issues that plagued CHRW over the last few years will resurface in 2015. Specifically, a fiercely intense competitive brokerage env’t along with increased pricing transparency has compromised CHRW's business model - which has historically benefitted from its scale and ability to arbitrage pricing dislocations in the underlying TL market," continued the analyst.

"In light of difficult y/y comps, stabilization in trucking (i.e. less volatility), and a likely deceleration in productivity, we see a significant slowdown in EBIT (to +5% from +9%) and EPS growth (to +7% from +15%) in 2015. Longer term, CHRW is targeting 5-10% growth in both net revenues and op income, which leaves little room for operating leverage going forward. As a result of these factors, we think that the 'new normal' is EPS growth in the high-single-digit range," she said.

For an analyst ratings summary and ratings history on C.H. Robinson Worldwide click here. For more ratings news on C.H. Robinson Worldwide click here.

Shares of C.H. Robinson Worldwide closed at $72.10 yesterday.



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