Wells Fargo Upgrades Landstar System (LSTR) to Outperform

January 8, 2013 8:51 AM EST Send to a Friend
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Price: $72.77 -0.93%

Rating Summary:
    5 Buy, 12 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 15 | Down: 28 | New: 20
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Wells Fargo upgraded Landstar System (NASDAQ: LSTR) from Market Perform to Outperform and raised its valuation range from $48-$50 to $59-$61.

The firm comments, "... we believe the business model is poised to outperform both asset based and non-asset based peers. Our 6-12 month valuation range is now $59-61 (was $48-50); we assume a 16.5-17.0x P/E multiple on our 2014E EPS of $3.58 compared to 17.4x current multiple on 2013E of $3.10. We like LSTR's exposure to the domestic industrial economy where we see ancillary market demand (housing, unconventional energy) keeping upward pressure on flatbed pricing even in a lackluster macro. Moreover, we believe the non-asset based model provides important insulation from productivity and expense drags that we expect the industry to face from pending 2013 regulations. These regulatory issues may also stimulate demand for brokerage services, which we believe LSTR is well positioned to capture. Please see our January 7, 2012 "Regulatory Matters" note for more details. Lastly, LSTR currently trades in line or at a discount to non-asset based peers despite gross margin resilience and expense leverage that has led to better operating margin performance. We suggest this implies attractive risk/reward versus non-asset based peers."

For an analyst ratings summary and ratings history on Landstar System click here. For more ratings news on Landstar System click here.

Shares of Landstar System closed at $54.00 yesterday.


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