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Tuesday, Benchmark analysts adjusted their outlook for J.B. Hunt Transport Services (NASDAQ:JBHT), reducing the price target to $175 from the previous $195 while sustaining a Buy rating on the stock. Currently trading near its 52-week low of $144.34, InvestingPro analysis suggests the stock is undervalued. The firm anticipates a normal sequential decline in operating income for the first quarter, potentially hitting the midpoint of the projected -20% to -25% range, factoring in a charge from the fourth quarter.
J.B. Hunt, which does not usually provide guidance, indicated in their fourth quarter call that the first quarter would likely see a customary decrease in operating income. Despite market challenges, the company has maintained its strong dividend track record, having raised dividends for 11 consecutive years, as noted by InvestingPro. This expectation aligns with the slowing growth of loaded import volumes on the west coast and intermodal volumes, despite their continued overall strength. Analysts believe that a portion of the intermodal volume growth in the first quarter may be attributed to the movement of empty containers returning to the west coast.
The company is facing several challenges, including volume weakness in other regions, competitive pricing pressure in intermodal, and margin pressure in its Dedicated segment due to fleet losses through the second quarter. With current revenue of $12.1 billion and a market cap of $14.6 billion, these factors are expected to contribute to another quarter of negative year-over-year EPS growth. Preliminary checks suggest that shippers are resisting intermodal rate increases more than truckload (TL) rates. Investors should note that J.B. Hunt’s next earnings report is scheduled for April 21, 2025.
Despite the current headwinds and a slower ramp expected due to a weak freight environment and tariff concerns affecting shipper sentiment, Benchmark analysts remain optimistic about J.B. Hunt’s long-term prospects. They point out the potential for intermodal revenue per load increases in the latter half of the year and into 2026. The company’s strong partnership with BNSF and efforts to bolster long-term intermodal growth and service are seen as positive indicators for future operating leverage once pricing conditions improve. For deeper insights into J.B. Hunt’s financial health and growth prospects, including additional ProTips and comprehensive analysis, visit InvestingPro.
In other recent news, J.B. Hunt Transport Services has announced the issuance of $750 million in senior notes with a 4.900% interest rate, maturing in 2030. This strategic financial move aims to strengthen the company’s capital structure and support its business operations. In addition, the company has introduced a new performance-based bonus plan for its executive officers, focusing on operating income, revenue excluding fuel surcharges, and safety performance. The bonus plan aligns executive compensation with company performance and safety objectives.
In analyst updates, Susquehanna downgraded J.B. Hunt’s stock from Positive to Neutral, reducing the price target to $165, citing margin pressures and inventory challenges. Meanwhile, BofA Securities adjusted its price target for J.B. Hunt to $170 but maintained a Buy rating, expecting earnings growth from a low point. The firm noted the impact of macroeconomic challenges and tariffs on their revised estimates. Additionally, J.B. Hunt director James L. Robo made a significant purchase of $9.99 million worth of company stock, increasing his holdings, which can signal confidence in the company’s future prospects.
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