Market Overview

Goldman On Transportation


Goldman Sachs has issued a report on America's Transportation industry.

In the report, Goldman writes "We expect railroad results to be mixed following more broad-based industry strength in recent quarters—as companies begin to bring assets/costs back on line to support increased volumes.
For 3Q2010 we expect:
*In-line results for CSX (Sell) and NSC (Neutral), which may not be enough given recent quarterly beats and high expectations due to volume strength this quarter.
*Positive risk-reward for UNP (Neutral), with the largest upside versus consensus expectations given improved pricing trends.
*Any weakness in CP (CL-Buy) is a buying opportunity, given that they likely faced currency and compensation (higher share price) headwinds in 3Q. CP remains our favorite railroad name given attractive bulk commodity exposure (met coal, potash), a margin catch up opportunity, and improving pricing trends.

Our channel checks suggest average 4-5% yoy base rate increases across trucking. This should more than offset spot market business that has started to soften after a surge in 2Q.
*Positive short-term risk-reward for CNW (Neutral): We see a positive stock setup given low investor expectations for 3Q, and the potential for improved LTL pricing expectations for 4Q.
*Remain on the sidelines for JBHT (Neutral): We continue to view JBHT favorably longer-term, however, we remain on the sidelines given: (1) our expectation for more consistent intermodal pricing to increase less than truckload, (2) increased costs and unfilled backhauls associated with new intermodal business could pressure near-term margins, and (3) valuation."

Companies related to this report include:

Air Freight:
United Parcel Service (NYSE: UPS) CL-Buy $67.88 $81
FedEx Corp. (NYSE: FDX) Neutral $87.83 $95

Union Pacific (NYSE: UNP) Neutral $82.42 $92
Norfolk Southern (NYSE: NSC) Neutral $59.51 $59
CSX Corp. (NYSE: CSX) Sell $56.06 $53
Kansas City Southern (NYSE: KSU) Neutral $38.32 $43
Canadian Pacific (NYSE: CP) CL-Buy C$63.04 C$75

CH Robinson (NASDAQ: CHRW) Sell $70.89 $56
JB Hunt Transport (NASDAQ: JBHT) Neutral $34.99 $39
Con-way Inc. (NYSE: CNW) Neutral $30.88 $31

Learn how to find the best stocks to trade each day in our 70 page E-Book and 90 minute online video for free.


Related Articles (CHRW + CNW)

View Comments and Join the Discussion!

Posted-In: canadian pacific CH robinson con-way csx fedex Goldman SachsAnalyst Color Analyst Ratings

Latest Ratings

ZMRBC CapitalMaintains550.0
ZMJP MorganMaintains450.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at