On Friday, Benchmark analyss revised the price target for Hub Group (NASDAQ:HUBG) stock upward to $49.00 from the previous $47.00, while reiterating a Buy rating on the company's shares.
Analysts' adjustment reflects a valuation based on anticipated earnings for the year 2026. They pointed to several positive indicators for Hub Group, including an increase in west coast loaded import volumes and robust intermodal growth with main rail partners Union Pacific (NYSE:UNP) and Norfolk Southern Corporation (NYSE:NSC).
These factors are seen as contributing to an uptick in intermodal volume growth for the company. Despite challenges such as rail service disruptions due to high international freight volumes and hurricanes, Hub Group has effectively repositioned equipment to meet customer needs and has seen a recovery in rail service.
Hub Group experienced a demand surge in the third quarter and, notably, a peak holiday season in the fourth quarter for the first time in years. The company has also introduced surcharge fees to help mitigate increased costs, although these are not expected to significantly enhance margins for the fourth quarter.
As the bid season commences, the analysts anticipate a quiet start due to initial focus on backhaul lanes and shorter length of haul bids. However, there is potential for improvement in the latter half of the season and into 2026. The analysts suggests that while the Logistics segment's brokerage business may face pressure, the intermodal volume growth and surcharge fees could lead to higher intermodal revenue.
Analysts also highlight Hub Group's strong balance sheet, which they believe positions the company well for further acquisitions and stock buybacks. They commend the company's new rail agreements, effective cost controls, and solid service performance, especially noting a 39% increase in east coast volumes during the third quarter.
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