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Investing.com - Stifel raised its price target on Hub Group (NASDAQ:HUBG) to $46.00 from $45.00 on Wednesday, while maintaining a Buy rating on the transportation company’s stock. The new target represents potential upside from the current price of $35.90, with InvestingPro data showing the stock is currently undervalued.
The price target increase follows Hub Group’s agreement to acquire Marten Transport (NASDAQ:MRTN)’s Intermodal division assets for $52 million in cash. The acquisition includes approximately 1,200 refrigerated containers and their associated contracts. With a market capitalization of $2.2 billion and a moderate debt level, Hub Group maintains financial flexibility for such strategic moves.
The deal will more than double Hub’s temperature-controlled intermodal fleet, positioning the company as the second-largest provider of these services in North America while enhancing its network density.
Hub Group management expects the acquisition to generate operational efficiencies and cross-selling opportunities. The company anticipates the deal will be immediately accretive to earnings per share in the fourth quarter of 2025 and throughout 2026.
Stifel highlighted Hub Group as one of its "best ideas" for small cap value investors, noting the company has diversified its service portfolio through both organic growth and disciplined bolt-on acquisitions while maintaining a strong balance sheet and free cash flow profile.
In other recent news, Hub Group has announced its plan to acquire the intermodal assets of Marten Transport for $51.8 million in cash. This acquisition will include approximately 1,200 refrigerated containers, positioning Hub Group as the second-largest provider of temperature-controlled intermodal solutions in North America. The transaction is expected to close by the end of the third quarter, pending customary closing conditions.
In the first quarter of 2025, Hub Group reported earnings per share (EPS) of $0.44, slightly exceeding analysts’ expectations, although revenue fell short at $915 million against a forecast of $973.86 million. Despite this revenue miss, the company improved its operating margins year-over-year, aided by increased intermodal volumes in specific regions. Analysts at Benchmark maintained a Buy rating on the stock, raising the price target to $40, while Evercore ISI lowered its target to $35 but kept an In Line rating.
The company has revised its full-year 2025 EPS guidance to a range of $1.75 to $2.25, down from the previous projection, due to anticipated declines in intermodal volumes, particularly in the Transcon business. Hub Group’s intermodal volumes have remained stable, although international volumes showed some weakness due to lower imports.
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