Gold is 2025’s best performer. UBS sees more upside
On Wednesday, Stifel analysts adjusted their outlook on Landstar System (NASDAQ:LSTR), reducing the price target from $147.00 to $140.00 while keeping a Hold rating on the stock. The revision follows Landstar’s first-quarter 2025 adjusted earnings per share (EPS) of $0.95, which aligned with the high end of the company’s revised guidance range between $0.90 and $0.95. This figure also surpassed the estimates set by Stifel and the consensus, which were $0.93 and $0.92 respectively. According to InvestingPro data, the company maintains strong financial health with a FAIR overall score, and notably holds more cash than debt on its balance sheet.
The earnings announcement was postponed due to an ongoing fraud investigation in one of Landstar’s ancillary business units. The fraud, which reportedly impacted the company’s earnings by approximately $0.10, is not connected to Landstar’s primary North American truckload business. However, the company has experienced other fraud-related issues, including imposter scams and cargo theft, resulting in a near doubling of the typical insurance claims ratio. Despite these challenges, InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 2.03, indicating its liquid assets exceed short-term obligations.
Landstar faced similar challenges as its industry peers during the earnings season. Despite the potential for a mild restocking phase, the company’s record-low BCO fleet and a softer-than-anticipated recovery in spot rates could limit the upside potential for earnings.
Stifel’s analysts acknowledge Landstar’s operational efficiency but suggest that, given the current valuation, there may be better risk/reward opportunities available in the market. The Hold rating indicates a neutral stance on the stock, implying that the analysts do not see significant upside or downside from the current stock price level.
In other recent news, Landstar System Inc. reported a mixed financial performance for the first quarter of 2025. The company’s earnings per share (EPS) came in at $0.85, missing the forecasted $0.94, but it surpassed revenue expectations with $1.15 billion against the projected $1.13 billion. Despite the revenue beat, the stock faced a price target cut from Evercore ISI, now set at $136, with an In Line rating maintained. This adjustment follows a supply chain fraud incident that resulted in a $4.8 million cost, which affected the earnings report and led to a two-week delay.
Evercore ISI analysts view the fraud as a non-recurring issue but have adjusted their EPS estimates for future quarters, citing ongoing challenges in the freight market. The company also reported a decline in gross profit to $98.3 million from $113.9 million the previous year, with a reduced gross profit margin of 8.5%. Heavy haul services, however, showed resilience with a 6% revenue growth, contributing positively amidst the challenges. Landstar’s management highlighted the strategic advantage of their operations in Mexico, amid shifting trade policies, as a potential growth area.
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