Piper Jaffray Downgrading Con-Way (CNW)

Piper Jaffray is downgrading shares of Con-Way, Inc. CNW to Underweight and cutting its price target on shares to $26. In a note to clients, Piper Jaffray writes, "We are downgrading CNW from Neutral to Underweight and setting a $26 price target as we believe expense reclassifications, not previously discussed but recently confirmed by mgmt, "one time costs," and other red flags raise material questions regarding earnings quality and visibility. Our proprietary analysis, which recently discovered expense reclassifications, shows that since 2Q10 CNW has shifted an estimated $17.9M/quarter from salaries/wages and maintenance to other operating expenses. We believe the reclassification makes the highly scrutinized wage line, a focus for investors given earnings disappointments and promised Freight changes, the appearance of greater improvement. The question begs to be asked: is there something structurally wrong with Freight?" Shares of CNW gained 2 cents on Friday to close at $33.19.