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On Wednesday, Susquehanna analyst Bascome Majors issued a downgrade for J.B. Hunt Transport Services (NASDAQ:JBHT), adjusting the stock’s rating from Positive to Neutral and reducing the price target to $165 from the previous $200. The stock, currently trading near its 52-week low at $149.95, is considered slightly undervalued according to InvestingPro analysis. The revision comes amid expectations of a challenging near-term outlook for the truckload cycle, reflected in the company’s recent revenue decline of 5.79% over the last twelve months.
Majors highlighted that freight shippers are currently facing margin pressures due to tariffs, which could negatively impact carriers’ ability to achieve rate and margin improvements during the bid season. Despite these challenges, InvestingPro data shows J.B. Hunt maintains a moderate debt level with a debt-to-equity ratio of 0.45 and has consistently paid dividends for 22 consecutive years. Additionally, a combination of inventory accumulation and wavering demand in the retail and industrial sectors is anticipated to dampen the typically strong demand experienced in the second quarter.
The analyst has revised downward the earnings per share (EPS) forecasts for companies in the truckload (TL), intermodal (IM), and brokerage sectors for the years 2025 and 2026. The new estimates are approximately 5% to 15% lower than the consensus for 2025, excluding RXO due to its low base, and 5% to 25% lower for 2026. This adjustment reflects the growing cyclical risks within the industry.
As a result of the revised EPS forecasts, Susquehanna has also adjusted its target multiples and target prices for these sectors. The firm downgraded J.B. Hunt’s stock to Neutral, noting that the potential 10% upside following the price target cuts falls short of their 15% threshold for a Positive rating.
Despite the downgrade for J.B. Hunt, Susquehanna maintains a Positive outlook on Knight-Swift Transportation Holdings Inc. (KNX), Hub Group (NASDAQ:HUBG), and C.H. Robinson Worldwide (NASDAQ:CHRW) within the TL/IM sectors following recent selloffs. For deeper insights into the transportation sector and comprehensive analysis of J.B. Hunt’s financial health, investors can access detailed Pro Research Reports and additional ProTips through InvestingPro. The firm is also Positive on GXO Logistics, citing its contractual business model, focus on Europe, and the beneficial effects of foreign exchange movements since February. A Neutral stance is maintained on Werner Enterprises (NASDAQ:WERN), Schneider National (NYSE:SNDR), and Landstar System (NASDAQ:LSTR), while the brokerage firm RXO is rated Negative.
In other recent news, J.B. Hunt Transport Services has announced the issuance of $750 million in senior notes, set to mature in 2030, with an interest rate of 4.900%. This strategic financial move is part of the company’s broader efforts to manage its capital structure and support its business operations. Additionally, BofA Securities has adjusted its price target for J.B. Hunt from $189 to $170 while maintaining a Buy rating, reflecting recalibrated expectations amid current economic conditions. The firm has also slightly lowered its earnings estimates for 2025, with the EPS forecast for the first quarter and full year now at $1.17 and $6.05, respectively.
In another development, director James L. Robo’s purchase of $9.99 million worth of J.B. Hunt stock has caught the market’s attention, signaling potential confidence in the company’s future. The company has also introduced a new executive bonus program, focusing on operating income, revenue excluding fuel surcharges, and safety performance, with bonuses tied to achieving specific performance thresholds. Furthermore, J.B. Hunt has increased its quarterly dividend to $0.44 per share, a 2.3% rise, reflecting its commitment to delivering value to shareholders. These recent developments highlight the company’s strategic financial planning and ongoing efforts to align executive compensation with performance objectives.
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