UBS Maintains a 'Neutral' on Hub Group (HUBG); Likely Accretion Scenario Priced into Stock

UBS maintains a 'Neutral' on Hub Group (NASDAQ: HUBG), PT increased from $38 to $43.

UBS analyst says, "HUB has acquired ETS, an asset-light, agent-based subsidiary of Deutsche Post that posted $717m in revenue in 2010 from intermodal (41%), truck brokerage (39%), LTL (12%), and other (8%). Hub paid $83m in cash for ETS, and management projects the acquisition to add $0.03-0.06 to EPS in 2011 (ex- $0.07/shr in one-time costs) and high-single to low-double digit cents per share in 2012. Assuming 0.5% operating margin and $5-6m in depreciation costs for ETS in 2010, Hub paid 9-10x trailing EV/EBITDA for ETS – not expensive relative to past deals in the logistics industry."

"We're raising 2011 and 2012 Hub EPS estimates from $1.53 and $1.86, respectively, to $1.59 and $1.98. Our 2012 estimate assumes Mode gross revenue up 5.7% from 2010 (market growth offset by modest agent attrition) and 1% EBIT margin."

For more ratings news on Hub Group click here and for the rating history of Hub Group click here.

Shares of Hub Group closed at $38.63 yesterday.

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