UPDATE: Credit Suisse Starts C.H. Robinson Worldwide (CHRW) at Underperform, 'Upside Limited in Our View'
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Credit Suisse analyst Ariel Rosa initiates coverage on C.H. Robinson Worldwide (NASDAQ: CHRW) with a Underperform rating and a price target of $102.00.
The analyst comments "We initiate coverage of C.H. Robinson with an Underperform rating and a $102 target price. CHRW is the largest freight broker in North America. It reports in three main segments: North American Surface Transportation (NAST, 63% of gross revenue, 57% of adjusted gross profit), Global Forwarding (29% of gross rev, 34% of AGP) and Corporate and Other (8% of gross rev, 9% of AGP). Its principal business consists of matching customers with transportation capacity across modes, with its largest segments being Truckload (41% of adj. gross profit), Less-than-Truckload (17% of AGP), Ocean (23% of AGP), and Air (7% of AGP). C.H. Robinson has been the second-best performing stock in our coverage yearto-date, down a modest -3.5% versus the broader market decline of -18% for the S&P 500. This reflects investor perception that CHRW is a good hedge against weakness in freight rates, as it benefits from declining freight capacity cost. Given its contract structure with customers (~60% contract/~40% spot as of 1Q22), it stands to benefit from the spread in falling rates. Alternatively, when this spread widens, volume could shift away from C.H. Robinson toward the spot market or to other carriers and brokers offering lower rates. This naturally limits the extent to which CHRW benefits from a favorable market. It has also seen a sizable uplift in recent years given tight international Ocean and Air capacity, with these gains potentially at risk as conditions normalize."
Shares of C.H. Robinson Worldwide closed at $103.86 yesterday.
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