KeyBanc Cuts Price Targets on Air Freight & Logistics Sector, Weaker Volumes May Pick Up Soon
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Price: $276.27 +0.66%
Rating Summary:
21 Buy, 17 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
21 Buy, 17 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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KeyBanc is maintaining its Buy rating on shares of J.B Hunt (Nasdaq: JBHT) and Hub Group (Nasdaq: HUBG), but is lowering its price targets on the companies from $45 and $54 to $40 and $48 due to recent due diligence including channel conversations. The firm currently has a Hold rating on shares of Pacer International (Nasdaq: PACR).
The firm reports that volumes quarter to date look to be lower than expected although a possible late surge is still possible. One of the main reasons for weak volumes includes that floods and terrible weather around the country. Early October or late September could see an increase in volumes as recent weeks seem to be normal.
KeyBanc is anticipating little variability in pricing and margins during the second half of the year due to such a large supply of possibilities for shipping.
To go inline with recent market trends and the firm’s new outlook, KeyBanc reduced its 2011 and 2012 EPS estimates on HUBG from $1.67 and $2.05 to $1.65 and $2.00, for JBHT from $2.14 and $2.55 to $2.05 and $2.45, and for PACR from $0.35 and $0.45 to $0.33 and $0.40.
An analyst at KeyBanc comments, “Our checks indicate 1H11 contractual rates remain intact, with base pricing increases generally in the mid single-digit range. However, reflecting new rate structures from certain rail carriers and indications of available box capacity in most key markets compared to shortages last year, our sense is peak and overage charges quarter-to-date have been limited to Union Pacific implementing a $500/container fee for over allocations from its fleet beginning this week.”
The firm reports that volumes quarter to date look to be lower than expected although a possible late surge is still possible. One of the main reasons for weak volumes includes that floods and terrible weather around the country. Early October or late September could see an increase in volumes as recent weeks seem to be normal.
KeyBanc is anticipating little variability in pricing and margins during the second half of the year due to such a large supply of possibilities for shipping.
To go inline with recent market trends and the firm’s new outlook, KeyBanc reduced its 2011 and 2012 EPS estimates on HUBG from $1.67 and $2.05 to $1.65 and $2.00, for JBHT from $2.14 and $2.55 to $2.05 and $2.45, and for PACR from $0.35 and $0.45 to $0.33 and $0.40.
An analyst at KeyBanc comments, “Our checks indicate 1H11 contractual rates remain intact, with base pricing increases generally in the mid single-digit range. However, reflecting new rate structures from certain rail carriers and indications of available box capacity in most key markets compared to shortages last year, our sense is peak and overage charges quarter-to-date have been limited to Union Pacific implementing a $500/container fee for over allocations from its fleet beginning this week.”
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