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Stifel has adjusted its financial outlook for Hub Group (NASDAQ: NASDAQ:HUBG), a multi-modal transportation solutions provider, reducing the price target on the company's shares to $43 from $45, while retaining a Buy rating.
The adjustment comes in the wake of the company's second-quarter earnings report for 2024.
Hub Group announced a second-quarter earnings per share (EPS) of $0.47, which aligned with the general market consensus but fell slightly short of Stifel's $0.49 estimate. The company experienced an 8% year-over-year growth in intermodal volumes, surpassing expectations.
However, the yield was notably weaker due to prolonged competitive pressures in the market. Furthermore, the growth in local East Coast volumes, although robust, negatively impacted the overall mix.
The competitive market conditions have led to a more cautious outlook from the company's management, who have revised their guidance to a conservative range.
Despite the immediate challenges, Stifel's long-term view of Hub Group remains optimistic. The firm believes that Hub Group has evolved into a more diversified, resilient, and higher-growth organization with superior cash flow generation capabilities.
This evolution, according to Stifel, is not yet fully reflected in the company's historical valuation range.
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