Jefferies Initiates Coverage On JB Hunt Transport

Jefferies initiates coverage on JB Hunt Transport JBHT with a Buy rating and $50 PT. Jefferies prefers JBHT over the pure-play TLs for three reasons. Intermodal is the fastest growing area of freight and has increased 20% over the past decade. Materially improved returns have also increased and JBHT is less vulnerable to Jefferies below-consensus call on TL loads and yields in mid-2011. Most analysts who recommend JBHT highlight the intermodal business. Sentiment is already skewed very positively on JBHT, as with the rest of the truck stocks. Jefferies is buyers, especially on pull-backs. Risks to the price target include a year-end PT of $50/share. It reflects a year-end target P/E of 20.0x on Jefferies 2012e estimate of $2.52. It's target P/E is in line with the stock's current forward P/E of 20.5x. JBHT closed Thursday at $41.42