- Raymond James analyst Patrick Tyler Brown reiterated an Outperform rating on the shares of J.B. Hunt Transport Services Inc JBHT and raised the price target from $195 to $203.
- The company reported Q4 FY22 sales growth of 4% Y/Y to $3.65 billion, missing the consensus of $3.84 billion.
- While revenues underperformed Street expectations, adjusted operating income ($346 million) was largely in-line, driven primarily by pricing gains as volumes broadly declined, particularly within intermodal and trucking, said the analyst.
- Looking to segments, Intermodal volumes remain challenged (-1% y/y), and sequentially decelerated throughout the quarter, the analyst added.
- Undoubtedly the near-term environment remains challenging given elevated inventory levels and a cloudy macro, said the analyst.
- This said, the management feels positioned to weather the storm as rail service improves, customer conversations continue to indicate a desire to convert highway business to the rails, and the pipeline in DCS remains strong, added the analyst.
- While opaque in the near term, the analyst believes that JBHT’s longer-term story lies in its multi-year intermodal capacity addition program, driving box turns from ~1.5x to ~1.8x, leaning into its 360-box program and continued growth in its sticky DCS segment.
- While an improving macro, sustained improved service, and customers' willingness to convert to intermodal remain key, the analyst sees the building blocks for upside potential being laid.
- Price Action: JBHT shares are trading higher by 0.89% at $186.66 on the last check Thursday.
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