Deutshe Bank Says Management Change At Con-Way Should Help (CNW)

Deutsche Bank is out with some research on Con-way Inc. CNW after the President of Con-way Freight announced he has left the company. Deutsche Bank has a Buy rating and a $35 price target on Con-way. In the research report, Deutsche Bank writes, "Yesterday, CNW announced that President of Con-way Freight (LTL business unit), John Labrie, has left the company. Current CEO and president of CNW, Douglas Stotlar, has assumed the position of interim president with the specific agenda of driving down costs and improving the LTL price structure. We believe the management change is a positive for CNW and should be viewed as a step toward restoring a once "best-in-class" operation. We reiterate our Buy rating as shares are trading at what we believe to be an attractive entry point." Deutsche Bank goes on to say that shares are attractive here. "Shares of CNW are down 21% YTD (versus S&P 500, which is down 6%) and are trading at 17.0x our forward 12-month (4 months 2010 and 8 months 2011) EPS estimate of $1.62. At current valuation, we believe shares are already pricing in a challenging H2 2010. We are reiterating our Buy recommendation and price target of $35/share. Our price target is based on 17.5x our 2011 EPS estimate of $2.00. Our multiple is inline with CNW’s historical average P/E multiple of 17.5x. Risks include higher-than-expected purchased transportation expense, high self-insured deductible, and a double dip." Shares of Con-way gained 36 cents to close at $27.52 yesterday.