JP Morgan Gives Earnings Preview On Expeditors International

When Expeditors International EXPD reports results on May 4 JP Morgan expects the company to show strong 1Q EPS growth. However, while its ocean freight gross yield forecast appears to leave some room for modest upside to ocean net revenue, it believes an in line 1Q report is likely based on the read through to EXPD's net revenue from Kuehne & Nagel's 1Q report. This leaves operating expenses as a possible area where EXPD could show better performance than expected, but the recent precedent is that while cost control has been strong it was not as good as JP Morgan expected in 4Q10. Given EXPD's culture of maintaining stability in its workforce, JP Morgan believes its estimate of $234M of compensation cost in 1Q on $424M of net revenue is reasonable, compared to $238M on $453M in 4Q10. JP Morgan is maintaining its 1Q EPS estimate of $0.36 as the read on total net revenue growth from K&N indicates the 17% it is already modeling is reasonable. The Street consensus estimate of $0.37 reported by Bloomberg also appears reasonable. JP Morgan has a $58 PT and Neutral rating on EXPD EXPD closed Monday at $51.06