On Thursday, Benchmark reduced its price target for J.B. Hunt Transport Services (NASDAQ:JBHT) to $200 from $215, while keeping a Buy rating on the stock. The adjustment follows J.B. Hunt's recent earnings report, which fell short of both FactSet and Benchmark's expectations. The company reported a GAAP EPS of $1.22, notably lower than the anticipated $1.50 by FactSet and $1.61 by Benchmark. The shortfall was attributed to lower-than-expected operating profit across all segments of the business.
J.B. Hunt's intermodal capacity demand did not meet the company's forecasts, as they faced ongoing price competition from truckload carriers, especially in the eastern United States. Despite predictions for a 4.9% increase in total intermodal volume growth, the actual figures remained stagnant. Furthermore, intermodal revenue per load declined by 9.2%, continuing to be affected by competitive truckload (TL) rates.
The transportation firm is currently bearing additional costs that total around $100 million, which are not aligned with the present business volume. This strategy has led to significant margin pressure. Benchmark expressed concerns over J.B. Hunt's ability to scale into these costs if the TL oversupply persists. However, the analyst firm anticipates that the setup for intermodal services in 2024 could be more favorable than in the previous year, suggesting that the stock could become more attractive as volumes improve and potentially drive better pricing.
In light of the first-quarter earnings miss and a slower-than-expected recovery, Benchmark has revised its financial forecasts for J.B. Hunt. The firm has lowered its second-quarter 2024, full-year 2024, and full-year 2025 estimates. Despite the reduction in the price target and earnings estimates, Benchmark maintains a positive outlook on the stock for the future.
InvestingPro Insights
As J.B. Hunt Transport Services (NASDAQ:JBHT) navigates through a challenging period, highlighted by Benchmark's revised price target, real-time metrics from InvestingPro provide additional context for investors. The company's market capitalization stands at $17.37 billion, with a Price/Earnings (P/E) ratio of 23.86, which adjusts to 26.39 when considering the last twelve months as of Q1 2024. Despite a revenue decline of 13.82% over the same period, J.B. Hunt maintains a Gross Profit Margin of 18.67%, indicating a level of resilience in profitability.
Two InvestingPro Tips that could be particularly relevant to investors in this context are: J.B. Hunt has raised its dividend for 10 consecutive years, showcasing a commitment to shareholder returns even in tougher times, and the stock is currently trading near its 52-week low, which may present a buying opportunity for those who believe in the company's long-term fundamentals. Notably, analysts predict the company will be profitable this year, as reflected in the positive Basic and Diluted EPS from the last twelve months. For investors seeking a deeper dive into J.B. Hunt's performance and future prospects, there are 16 additional InvestingPro Tips available at https://www.investing.com/pro/JBHT. Don't forget to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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