Analyst cuts J.B. Hunt guidance on weather disruptions

by The City Wire staff ([email protected]) 93 views 

Mother Nature has not been kind this winter to many business sectors from retail to airlines, and certainty not trucking and logistics firms who lose money every day trucks and trains are idle.

Analysts with Stephens Inc. said weather disruptions in the first quarter are likely to have a negative impact on J.B. Hunt’s intermodal operations, which was the basis for a 10-cent reduction in expected first quarter earnings per share. (Stephens provides investment banking services for J.B. Hunt Transport and is compensated accordingly.)

“We remain Overweight with an $87 price target on shares of J.B. Hunt Transport, but we are lowering first quarter estimates,” Brad Delco, analyst with Stephens, writes in March 12 note to investors.

Shares of J.B. Hunt Transport (NASDAQ:JBHT) closed Wednesday (March 12) at $72.75, down 33 cents. For the past 52 weeks the share price has ranged from $67.97 to $79.89.

Delco expects J.B.Hunt to earn 60 cents per share in the first quarter, reduced from 70-cents. He said the transport company’s exposure on the BNSF railroad in/around the Chicago area are creating service disruptions due to the recent string of severe weather. He adds that reduced volumes reported by BNSF will directly impact Hunt’s intermodal segment.

“We lowered our first quarter intermodal volume estimate from 11.5% to 6% and lowered our fiscal 2014 estimate from 11.2% to the low end of the 10% to 14% guidance range. In addition to volume disruptions, we believe that Hunt has lost some potential momentum on pricing, as recent service disruptions impede the likelihood of near-term pricing gains,” Delco noted.

Despite the recent headwinds, Delco said Hunt still provides a solid long-term growth potential from the following:
• Further load conversion to intermodal;
• Improved intermodal pricing;
• More contracts for the dedicated services segment;
• Better earnings from recent expansion in the brokerage segment; and
• Better truckload efficiencies following recent management restructuring.