On Friday, Benchmark analysts reaffirmed their Buy rating and $195.00 price target for J.B. Hunt Transport Services (NASDAQ:JBHT), a prominent player in the transportation and logistics industry. The analysts highlighted that J.B. Hunt faced underperformance in 2024 due to carrying excess costs and capacity in anticipation of a rebound in domestic intermodal volume growth. Despite the challenges, the company has seen an increase in west coast domestic intermodal loads, supported by strong volume growth reported by its rail partner BNSF.
The surge in loaded import volumes has been a positive development for J.B. Hunt, although it has also led to service issues for BNSF, subsequently raising J.B. Hunt's costs to maintain high service levels. These efforts are expected to be advantageous during customer negotiations in the upcoming bid season. J.B. Hunt was noted as the first company to indicate an early peak season due to advanced demand, which resulted in a holiday peak, albeit a muted one.
According to Benchmark analysts, Intermodal Marketing Companies (IMCs) have been able to apply surcharges to mitigate equipment repositioning costs from different regions. However, volume weaknesses in other parts of the country and price pressures from a competitive bid season may continue to affect margins. The company's Dedicated segment is also facing margin pressures due to startup costs and losses in its Integrated Capacity Solutions (ICS) segment.
Despite the expectation of another quarter of negative year-over-year earnings per share growth, Benchmark analysts have only slightly adjusted their estimates, having anticipated these factors after third-quarter earnings. They foresee potential for intermodal revenue per load increases in the next year and into 2026.
Benchmark's continued confidence in J.B. Hunt is also based on the belief that once truckload (TL) prices improve, the company will benefit from more opportunities for over-the-road (OTR) conversions, especially given J.B. Hunt's solid relationship with BNSF and efforts to enhance long-term intermodal growth and service.
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