J.B. Hunt Now Carrying A Positive Outlook On 2 Fronts

As such, the firm upgraded shares of J.B. Hunt from Neutral to Buy and upped its price target from $115 to $126.

Analyst Thomas Wadewitz attributed the upgrade to his expectations that both freight demand and pricing will translate to attractive multi-year earnings per share growth for J.B. Hunt in both fiscal years 2018 and 2019.

Referring to his analysis of the ISM inventory data and the Cass Freight Shipments Index, which were found to share a direct relationship, Wadewitz said the recent sharp rise in the ISM metric clearly points to a positive outlook for freight volume and a potential acceleration in activity.

Although the analyst believes optimism regarding stronger price is already priced in the stock, he said his analysis indicated that freight volumes could accelerate and surprise to the upside.

On pricing, UBS said the current pronounced tightness in the truckload market even prior to the impact on utilization from electronic logging devices mandates suggested strong TL & Intermodal pricing in 2018 and 2019.

UBS pointed out that it recently raised its 2019 earnings per share above consensus expectations.

"Against a backdrop of strong multi-year EPS growth for JBHT and given current equity market valuation, we believe JBHT's valuation is likely to remain well supported," the firm said of valuation.