CAI International CEO Sees Bright Future

After a recent meeting with CAI International CAP CEO and CFO, Piper Jaffray feels more positive regarding the outlook for CAI and the container leasing sector. They believe global container trade remains vibrant across all platforms. Piper believes utilization will remain relatively high for an extended period of time. Growth seems to be driven by investment volume, operating leverage, and pricing. Piper continues by saying while relatively high utilization rates are sustainable, utilization is no longer the main driver behind the strong earnings growth forecasted. Operating margin is also poised to expand. Increased margins are driven by higher utilization, earning assets, lease rates, and used equipment prices. Piper feels the leading container leasing companies have under appreciated operating leverage. Some risks to reaching the target price include intense competition, the global economy, balance of supply and demand, prices of containers, and the potential volatility of earnings. Piper Jaffray Reiterates its Overweight rating and has a $23 price target on CAP CAP closed Tuesday at $14.39