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Piper Jaffray Initiates Coverage on C.H. Robinson (CHRW) with a Neutral; Valuation Hindering in Near-Term

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November 13, 2009 8:11 AM EST

Piper Jaffray initiates coverage on C.H. Robinson (Nasdaq: CHRW) with a Neutral. Price target $60.

Piper analyst says, "CHRW nowhere near its longer term operating margin potential. We believe CHRW has the potential to materially improve its industry-leading operating margins. This should be driven by CHRW's further push into international as well as volume additions through acquisition. We don't see why over the longer term CHRW couldn't expand its net operating margin by 5pp-10pp more."

"So what's holding us back? Not much. However we believe valuation in the near term could hinder further stock upside. Given the Non Asset Based operating model and CHRW earnings underperformance (vs. other Transports) into a transitioning economy (from trough into gradual volume improvement) we see volume growth offset by pricing pressure in the near to intermediate term resulting in more modest EPS growth acceleration. We would get more constructive on CHRW if it proves it can grow net revenue and EPS at a greater degree than past transition periods or makes a large acquisition."

To see more analyst ratings on CHRW Click Here.

C.H. Robinson Worldwide, Inc. operates as a third party logistics company. It provides freight transportation services and logistics solutions to companies in various industries.