Piper Jaffray Gives Color On CAI International's Earnings Beat; Raises PT

CAI International CAP reported 4Q EPS of $0.57 vs. PJC at $0.46 and consensus of $0.43. The beat was driven by higher investment volumes driving increased lease income and by higher residual income on the sale of used containers in owned and managed containers. Investment in container equip. ended the year at $530m, above Piper's $480m estimate, up 77% y/y. Operating margins increased to 48% in '10 vs. 33% in '09. Utilization of 98% in 4Q has carried over to 1Q11. There is no sign of a slowdown in business fundamentals thus far, though Middle East turmoil is in early days. Piper Jaffray is raising its '11/'12 estimates to $2.30/$2.93 from $2.10/$2.68, and feels it remains conservative on several key drivers. Consensus was $1.80/$2.20 prior to the 4Q release. Piper's '11/'12 adjusted EPS estimates got to $2.30/$2.93 from $2.10/$2.68 and compare to consensus of $1.80/$2.20. Piper views its estimates as conservative as we are modeling very little gain on sale revenue and little benefit from rising lease rates. Piper Jaffray reiterates its Overweight rating and raises its price target on CAP to $29 from $25 CAP closed Tuesday at $20.30