UPDATE: Bank of America Upgrades C.H. Robinson Worldwide to Neutral, Raises PT as Net Revenue Margins Finally Inflect

In a report published Wednesday, Bank of America analyst Ken Hoexter upgraded the rating on C.H. Robinson Worldwide CHRW from Underperform to Neutral, and raised the price target from $52.00 to $68.00. In the report, Bank of America noted, “We raise our rating on CHRW's shares to Neutral from Underperform, and our price objective to $68 from $52. The critical question on C.H. Robinson is whether this quarter represents a turnaround toward margin expansion, or if this quarter is an anomaly. It certainly is not the growth stock it was several years ago (and its 21% share decline since 2011 reflects that), but it may also be settling into a more sustainable growth rate in the high single- to low double-digits. The truck market is facing tight capacity and rising spot rates, conditions which should help brokers as business fluctuates. While net revenue margin expanded, net operating margin declined this quarter. We expect truck pricing will continue to outpace costs given the tight market, a condition which should be accretive over the medium term. Based on our cautious optimism, we are upgrading to Neutral. Our PO climbs to $68 from $52, based on a 21x multiple of 2015E EPS (from 17.5x our 2014 EPS estimate). We increase our EPS estimates for 3Q14, 2014, and 2015 by 7%, 5%, and 5%, to $0.81, $2.97, and $3.25, from $0.76, $2.84, and $3.10, respectively.” C.H. Robinson Worldwide closed on Tuesday at $64.41.