JP Morgan: Pacer International Q4 Earnings Lower Than Expected (PACR)

In a new report out today, JP Morgan finds Pacer International PACR reporting lower than expected earnings. “After the close, PACR announced 4Q earnings of $0.05/share that was below our forecast of $0.11 and Consensus of $0.09, which excluded $0.08/share of debt retirement, severance, and equipment/office exit costs during the quarter. Although intermodal profitability improved modestly vs. 3Q:10, the logistics segment barely broke even in 4Q,” JP Morgan notes. “Management provided guidance for 6-8% revenue growth and EPS of $0.25-$0.30 in 2011. Although the revenue growth forecast appears reasonable in our view, the EPS range was meaningfully below our 2011 forecast of $0.38 and Consensus of $0.39. We believe this is driven by muted margin expectations as well as uncertainty regarding the legacy rail contract in 4Q:11. We expect the stock to react negatively to this guidance.” JP Morgan maintained Pacer's Neutral rating and Price Target of $6. Shares of Pacer are trading at levels over 22% from yesterday's close of $6.89.