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On Thursday, Benchmark analysts adjusted their outlook on J.B. Hunt Transport Services (NASDAQ:JBHT) by lowering the price target to $165 from $175, while still maintaining a Buy rating on the stock. The revision follows JBHT’s first-quarter earnings report, which revealed earnings per share (EPS) of $1.17, aligning with FactSet’s projection and slightly exceeding Benchmark’s expectation of $1.15. According to InvestingPro data, the stock currently trades at $128.09, near its 52-week low of $122.79, while 17 analysts have recently revised their earnings expectations downward for the upcoming period.
JBHT’s first-quarter performance was marginally above the guidance range provided in their fourth-quarter call, which predicted a normal sequential earnings decline of 20%-25%. Despite the uncertain economic outlook, the company’s results surpassed initial apprehensions, with trailing twelve-month revenue reaching $12.06 billion and EBITDA of $1.58 billion. Customers are currently evaluating various scenarios for their supply chain operations, with most adopting a ’wait and see’ approach. JBHT experienced some freight flow changes, particularly an increase in loads out of Mexico.
The company recorded a 7.6% year-over-year increase in intermodal load growth, especially in the eastern regions, which met their expectations. However, JBHT has seen only limited success in improving the Intermodal rate per load. This has been anticipated and was one of the reasons for the stock’s decline in the previous day’s trading. JBHT has shown a readiness to decline some bids that do not adequately reflect the level of service provided by the company.
During the 2024 bid season, lower pricing led to a 2% year-over-year decrease in Intermodal revenue per load excluding fuel, but this was better than expected and resulted in higher Intermodal margins than Benchmark had projected. While recognizing the volatility of the freight market and questions about JBHT’s earnings potential with record Intermodal volume but margins in the 6% range, Benchmark remains optimistic about the company’s long-term earnings growth. This confidence is based on JBHT’s consistent service quality and the ability to leverage past investments when the freight market rebounds. The company has maintained dividend payments for 22 consecutive years, demonstrating financial stability despite market challenges. For deeper insights into JBHT’s valuation and growth potential, InvestingPro subscribers can access comprehensive analysis, including Fair Value estimates and 12 additional ProTips that provide crucial context for investment decisions.
In other recent news, J.B. Hunt Transport Services has released its latest earnings report, showing an earnings per share (EPS) of $1.17, which slightly surpassed the average analyst expectations. Despite record intermodal volumes, the company faces challenges such as limited pricing power and macroeconomic uncertainty. In response, J.B. Hunt plans to reduce capital expenditures and focus on cost management due to the lack of a clear market turnaround. Analysts from TD Cowen, UBS, BMO Capital Markets, Benchmark, and Evercore ISI have adjusted their price targets for J.B. Hunt, reflecting cautious outlooks on the company’s future performance. TD Cowen reduced its target to $140, citing concerns over market conditions, while UBS lowered its target to $155, maintaining a Buy rating. BMO Capital Markets set a new target of $175, acknowledging solid first-quarter results but noting macroeconomic risks. Benchmark maintained its $175 target, highlighting J.B. Hunt’s strong volume growth and diversified business model. Evercore ISI adjusted its target to $165, maintaining an Outperform rating but noting challenges in margin improvement and market uncertainty. These recent developments indicate a mixed outlook for J.B. Hunt, with analysts expressing both caution and confidence in the company’s ability to navigate current challenges.
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