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Deutsche Bank Upgrades YRC Worldwide Following Earnings

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Shares of YRC Worldwide Inc (NASDAQ: YRCW) were moving higher Friday on heavy volume. The trucking company delivered earnings after Thursday's market close, with operating revenue for the Q3 2014 of $1.323 billion, $70.0 million (or 5.6 percent) higher than the $1.253 billion reported in Q3 2013.

Deutsche Bank upgraded YRC Worldwide to a Buy from a Hold and raised the price target from $22 to $24, as "network initiatives show promise."

Adjusted EBIDTA of $81.6 million came in 4.21 percent higher than Deutsche Bank's estimates of $78.3 million.

Deutsche Bank feels that YRCW "has the most leverage to strong LTL fundamentals" of the sector.

"We believe will produce strong incremental margins as YRC Freight adds density to an under-utilized fixed-cost network, raises yields given improving service and technology investments, and optimizes its cost structure.

"Yesterday, YRCW reported Q3 adjusted EBITDA of $81.6 million, which was above our estimate of $78.3 million and its pre-announced range of $75-80 million, as the company reaped the benefits from its network optimization initiatives, a strengthening pricing environment, and better cost controls. BUY.

YRCW Has The Most Leverage To Strong LTL Fundamentals YRCW has the most leverage to strong LTL fundamentals

"We believe YRCW has only just begun to realize its margin expansion potential from its various network initiatives that will likely play out of the next several quarters.

"We are cognizant that LTL turnaround stories can have some volatility in the early innings though we believe management has a blueprint, and the early signs of the earnings improvement surfaced in Q3, which caused us to revisit our Investment Thesis

"Downside risks include heightened competition from better capitalized firms, worse-than-expected yield improvement, financial leverage, unexpected labor issues, and the broader economy.

"Our raised $24 price target is based on 5.5x EV/EBTDA multiple on our 2015 EBITDA estimate of $310.6 million."

Shares of YRC were up 16.3 percent at $21.17.

Latest Ratings for YRCW

DateFirmActionFromTo
Nov 2016Stephens & Co.AssumesOverweight
Nov 2016Deutsche BankInitiates Coverage OnHold
Oct 2016Aegis CapitalInitiates Coverage OnBuy

View More Analyst Ratings for YRCW
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Posted-In: Analyst Color Upgrades Price Target Analyst Ratings

 

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