On Wednesday, BMO (TSX:BMO) Capital Markets maintained its positive stance on shares of J.B. Hunt Transport Services (NASDAQ:JBHT), reiterating an Outperform rating and a $195.00 price target. The firm's analysis follows recent meetings with the senior leadership teams of JBHT and Hub Group (NASDAQ:HUBG), focusing on the intermodal segment's performance and outlook.
Hub Group, trading near its 52-week high of $53.21, has shown strong momentum with a 29% return over the past year. InvestingPro data reveals the company maintains a Fair financial health rating, particularly excelling in price momentum metrics.
The intermodal segment, particularly the U.S. transcontinental routes, is showing signs of solid volume growth. The firm's outlook suggests confidence in potential price improvements, especially for head haul lanes originating from the west coast, provided the current demand strength continues. This optimism is underpinned by the anticipation of a continued recovery in this segment.
According to InvestingPro's analysis, Hub Group operates with moderate debt levels and maintains a healthy current ratio of 1.3, suggesting strong operational stability. Get access to the comprehensive Pro Research Report and 7 additional ProTips for deeper insights into Hub Group's financial position.
While the eastern intermodal is benefiting from a shift from truck to rail transport, pricing improvements in this area are challenging due to the excess truckload capacity. Despite this, the overall sentiment from the meetings indicates that the companies might have moved past the lowest point of the business cycle.
The pace of recovery, particularly in terms of pricing, remains uncertain. However, BMO Capital Markets views the current valuation levels of JBHT as attractive when considering the company's mid-cycle earnings potential. JBHT is favored by the firm as the preferred intermodal carrier, as indicated by the Outperform rating and the maintained price target.
In other recent news, Hub Group, a major player in the freight and cargo transportation industry, has reported mixed third-quarter results. Despite a minor revenue decrease of 3.7% to $987 million, the company saw intermodal volumes rise by 12% and an improved adjusted operating income margin of 4.3%.
Hub Group also announced executive changes, appointing Brian Meents as the new Executive Vice President and Chief Operating Officer. The firm has also returned $91 million to shareholders and maintained a strong capital structure.
TD (TSX:TD) Cowen has raised Hub Group's stock target from $43.00 to $49.00, while maintaining a Hold rating, following these developments. The revised stock price target reflects the company's ongoing efforts to realign its network and establish a joint venture that significantly expands its reach into the Mexican market.
This joint venture with Mexico's EASO is expected to enhance logistics offerings and be slightly accretive to earnings. In the light of these recent developments, the company projects a full-year adjusted EPS of $1.85 to $1.95 and revenue of approximately $4 billion.
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