Piper Jaffray Reiterates Overweight Rating on JB Hunt (JBHT)

Piper Jaffray is out with a research report this morning, where it reiterates its Overweight rating on shares of JB Hunt Transportation Services

; it has a $42 price target on the stock. The PJ analysts said, “Yesterday after the market JBHT reported 2Q10 EPS of $0.40 (72% y-o-y growth) above Consensus $0.35 and our $0.36 estimate. Upside to our estimate was driven by: (1) stronger revenue on greater yields (price) and (2) better than anticipated operating margins (cost side and mostly yield driven). Intermodal, Dedicated, and Truck all easily beat our 2Q10 profit assumptions. Notably smaller profit contributor Truck EBIT was nearly double our estimate driven all on yields (pricing improved 8% sequentially during 2Q10 well above our estimate) and improved utilization. Our above Consensus out year EPS estimates remain relatively unchanged as expectations play catch up. They added, “Dedicated and Truck 2Q reported ORs of 90.2% and 94.2% were 80bp and 280bp better than our estimates. Contractual Dedicated trucking op loads were well above our expectations while yield (price) was modestly better. Truck op loads - on a smaller fleet - missed our estimates but stronger than anticipated yields more than made up for this with EBIT nearly doubling.” The PJ analysts further noted, “Truck market capacity tightened throughout 2Q10 and likely into July. Truck op yields (rev per load) were up 18.5% y-o-y and 8.3% sequentially - recovering much faster than we had anticipated exhibiting the potential for much stronger pricing power in quarters to come. Dedicated 2Q10 yields improved to a lesser extent likely more a reflection of contractual nature of the business vs. a lack of pricing power.” They closed by saying, “We believe JBHT's 2Q10 report is just a taste of what's to come with respect to profitability potential across Intermodal and Truck operations (Dedicated and Truck). Volumes have been strongly trending upwards and given a tightening - and getting tighter - capacity environment JBHT and other asset owning Intermodal/Truck providers are in a position to likely command much larger rate increases moving forward well ahead of market expectations.”