KeyBanc Says Transportation, Logistics Names Have Short-Term Drivers; JB Hunt Downgraded On Limited Upside

Transportation and logistics companies should benefit from encouraging short-term fundamentals at a time when the sector has been hit with a "deterioration in sentiment," according to KeyBanc Capital Markets. 

The Analyst

KeyBanc's Todd Fowler downgraded J B Hunt Transport Services Inc JBHT stock rating from Overweight to Sector Weight with no assigned price target.

The Thesis

Channel checks conducted by KeyBanc suggest "seasonally strong" freight activity was seen during the first quarter, consistent with the 2-percent sequential increase in the firm's dry-van spot rate index since the start of January, Fowler said in a Wednesday report.

An increase since Jan. 1 would also represent an improvement from the five-year average change in the index of negative 5 percent over the same time period.

Investor concern around incremental capacity will likely persist, and it is possible that the strong 2018 contract pricing dynamics currently seen in the market are "largely discounted," the analyst said.

Pricing volume and pricing comparison modes will become more challenging into the bottom half of 2018, which may prevent upside in some stocks, according to KeyBanc. 

JB Hunt Downgraded

KeyBanc's downgrade of J.B. Hunt is based on a view that upside to management's guidance beyond the first quarter is "increasingly limited," Fowler said.

Price Action

Shares of J B Hunt Transport Services were trading up more than 1 percent at the time of publication Thursday afternoon. 

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