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On Thursday, Truist Securities adjusted its price target for Landstar System (NASDAQ:LSTR) shares, reducing it to $150 from the previous $160, while maintaining a Hold rating on the stock. The modification follows the company’s analyst meeting held on Wednesday, which led to revisions in the firm’s financial projections for 2025 and 2026, primarily due to increased insurance costs. According to InvestingPro data, the stock is currently trading near its 52-week low of $144.13, with analyst price targets ranging from $130 to $186.
In his statement, the Truist analyst highlighted that despite the expectation for Landstar to benefit from nearshoring trends and an improved freight market in the long term, the potential for margin expansion remains limited. This is particularly due to the ongoing rise in insurance premiums. The analyst also pointed out the risks associated with cross-border tariffs, which are significant considering Landstar’s growth strategy heavily focuses on cross-border operations. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 1.96 and holds more cash than debt on its balance sheet, potentially providing a buffer against these challenges.
Landstar’s commitment to shareholder returns was evident in the first quarter of 2025, with the company repurchasing approximately 386,000 shares at a cost of $60 million. The company still has the capacity to buy back an additional 2.1 million shares under its current authorization program. InvestingPro data reveals the company has maintained dividend payments for 21 consecutive years and raised dividends for 5 consecutive years, with a current yield of 2.26%. However, the stock’s valuation, trading at around 28 times Truist’s estimated earnings per share for 2025, suggests to the analysts that the market may have already priced in the potential positives. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels.
Truist has updated its earnings estimates for Landstar for the years 2025 and 2026 to $5.40 and $6.85 per share, respectively. These revisions are to accommodate a higher base of insurance costs. The new model assumes "Insurance and Claims" costs will constitute 3.0% and 2.8% of consolidated sales for 2025 and 2026, an increase from the former estimates of 2.3% and 2.5%. The updated financial outlook reflects the firm’s cautious stance on the stock, suggesting investors maintain a watchful approach. For deeper insights into Landstar’s financial health and valuation metrics, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.
In other recent news, Landstar System Inc. reported its fourth-quarter 2024 earnings, which revealed a slight miss on earnings per share (EPS) forecasts, coming in at $1.31 compared to the anticipated $1.36. However, the company exceeded revenue expectations, reporting $1.21 billion against a forecast of $1.2 billion. The company anticipates first-quarter 2025 revenue to be between $1.075 billion and $1.175 billion, with EPS expected to range from $1.05 to $1.25, despite predicting a potential decline in truckload volumes. Goldman Sachs maintained a Sell rating on Landstar with a price target of $150, citing challenges in the truckload industry and higher than anticipated insurance and claims costs. The company adjusted its earnings guidance for the first quarter of 2025, expecting EPS to fall between $0.90 and $0.95, down from the previous forecast of $1.05 to $1.25, due to a 4% decline in loads. Despite these challenges, Landstar’s heavy haul service showed strong performance, with revenue up 24% year over year in the fourth quarter. The company also highlighted a 6% year-over-year revenue increase in its unsighted platform service offering, driven by improvements in revenue per load. Landstar’s management remains cautiously optimistic about market conditions improving steadily throughout 2025.
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