UPDATE: J.P. Morgan Reiterates Neutral Rating, Lowers PT on Knight Transportation
In a report published Monday, J.P. Morgan & Co. reiterated its Neutral rating on Knight Transportation (NYSE: KNX), but slightly lowered its price target from $17.00 to $16.00.
J.P. Morgan noted, “In contrast to KNX's 2Q upside earnings report, which was driven primarily by a net fuel benefit, we expect the sharp rise in fuel prices to be a material headwind in 3Q:12. We believe the prior guidance ranges for 3Q and 4Q did not reflect a sharp rise in fuel and we believe there is risk of a 3Q downside earnings report relative to the guidance ranges due primarily to fuel. We believe near-term upside to earnings is limited. Over the longer term, we would expect KNX to grow earnings through fleet growth in their asset based divisions as well as through growth in their lower margin asset light segments (i.e. brokerage, intermodal). While KNX has room for some margin improvement, we believe that fleet growth and pricing are important drivers of growth. At the present time, we believe that KNX's revenue and EPS growth is likely to be modest relative to its strong historical performance. With KNX trading at 15.3x our 2013 EPS forecast, we believe the stock reflects the expectation of solid EPS growth looking forward with limited room for upside. At the present time we continue to rate KNX Neutral.”
Knight Transportation closed on Friday at $14.53.
Latest Ratings for KNX
|Feb 2015||UBS||Initiates Coverage on||Buy|
|Jan 2015||Credit Suisse||Maintains||Neutral|
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