On Monday, Bernstein SocGen Group slightly raised its price target for J.B. Hunt Transport Services (NASDAQ: JBHT) from $182.00 to $184.00, keeping a Market Perform rating. This change is due to mixed signals about the company’s fundamentals.
The report noted a 7.2% rise in domestic intermodal volumes for July and August, suggesting improvements in September as well. While market growth is projected at 6-7%, current expectations for J.B. Hunt’s intermodal volume are flat, which could be too conservative; a 3% increase is expected.
However, challenges exist; railroads are cutting rates to compete with an oversupply of trucks, affecting J.B. Hunt’s earnings. Revenue per unit projections are 1-2% below consensus due to these rate cuts.
The report also mentioned a potential decline in Dedicated Contract Services (DCS) load counts due to weaker economic conditions. Additionally, the Integrated Capacity Solutions business reported a $55 million loss over the past year, indicating potential cost issues.
Consensus forecasts for J.B. Hunt’s earnings per share have dropped by 29% and 25% for fiscal years 2024 and 2025 since their last earnings report. While optimism exists for 2024, a slower recovery is expected in 2025 and 2026 due to excess market capacity.
Recently, J.B. Hunt announced a $1 billion stock buyback program following an earnings report showing a GAAP EPS of $1.32 and strategic acquisitions aimed at enhancing capacity.
Citi rates J.B. Hunt as a Buy with a target price of $201, while Benchmark and BMO Capital maintain Buy ratings. Conversely, Stifel lowered its target to $151.
The company also expressed sorrow over the loss of board member Patrick Ottensmeyer, a valued contributor.
InvestingPro Insights
InvestingPro adds that J.B. Hunt has a market cap of $17.41 billion and a P/E ratio of 28.99, reflecting a high valuation. The company has maintained dividends for 21 consecutive years and operates with moderate debt, offering some financial flexibility.
However, be aware that 11 analysts have downgraded earnings forecasts, in line with concerns over yield challenges and weaker economic activity.
For a deeper analysis, InvestingPro provides five additional insights into J.B. Hunt’s financial health.
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