Covenant Transportation (CVTI) Blows Out Estimates on eCommerce Boost

Covenant Transportation Group (NASDAQ: CVTI) is up sharply Thursday (+13.5%) after the company shocked Wall Street with strong Q4 EPS guidance that was nearly double what the Street was expecting.

BB&T Capital Thomas Albrecht provided his thoughts on what was behind the big beat. Albrecht said one of the factors is the company's strong presence in expedited services, which represented about 39% of its 2013 revenues. In addition to a seasonally strong quarter, expedited is benefiting from secular growth in e-commerce, and FedEx (NYSE: FDX) and UPS (NYSE: UPS) rank among Covenant's top customer.

Albrecht added that bottlenecks at the West Coast ports have also helped as shippers are turning to expedited carriers like Covenant to move freight.

Lastly, the analyst said Covenant is in the midst of a real turnaround, and recent investments in IT, equipment, and safety, are having a meaningful operational and financial impact.

The firm reiterated a Buy rating and boosted its price target to $35. FY 2014 EPS goes from $1.02 to $1.33, FY 2014 EPS goes from $1.15 to $1.43 and FY 2016 EPS from $1.56 to $1.81.

For an analyst ratings summary and ratings history on Covenant Transportation Group click here. For more ratings news on Covenant Transportation Group click here.

Shares of Covenant Transportation Group closed at $24.46 yesterday.

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