Piper Jaffray Maintains Neutral Rating on Landstar System

Last Friday afternoon during market hours, Landstar System Inc. LSTR conducted its regularly scheduled mid-2Q11 update call, Piper Jaffray reports. “Management reiterated its 2Q11 EPS guidance range of $0.56-$0.61 and targeted net operating margin of 42%,” Piper Jaffray writes. “Demand during the first two months of 2Q11 is "stable" per management while pricing sequentially improved each month. Our sense is TL aggregate market demand thus far in 2Q11 is good but not great (i.e. March 2011 above normal seasonality strength); however, TL carriers given prior capacity reductions are taking up price slightly ahead of market expectations (+5% on average) we believe. “While LSTR benefits in its BCO operations from ramping TL price our sense is Brokerage is getting modestly more squeezed than expected.” Piper Jaffray closed Friday at $46.97.