RBC Upgrades J B Hunt To Outperform, Sees Many 'Favorable Earnings Catalysts' Coming

In a report published Wednesday, RBC Capital analyst John Barnes upgraded the rating on

from Sector Perform to Outperform, while raising the price target from $92 to $105. The analyst expects the company to witness improving results across all its four divisions. With the truck industry facing a capacity crunch within a competitive sector, the analyst expects continued modal conversions to rail. In addition, with rates expected to rise in the intermodal market, JB Hunt is well positioned to see meaningful margin growth in its intermodal division. "Furthermore, we believe that the company's dedicated division is poised to see more robust growth as truck capacity tightens and shippers again become more focused on procuring consistent capacity," Barnes stated, while adding that he expected to see "steady growth in both the brokerage and TL divisions." According to the RBC Capital report, "JBHT possesses catalysts greater than most in the intermodal and TL arena. Intermodal volumes are poised to make a return in a meaningful way, and the industry is doing a commendable job of taking rates higher, which it is hasn't done in the past." With tightening of truck capacity, the analyst expects the company to see robust growth, across the board, including significant operating income being contributed by both the dedicated and intermodal businesses. Earnings are expected to rise meaningfully in the years to come, which would drive the stock to outperform its peers.