On Tuesday, Evercore ISI made adjustments to its stock ratings by removing J.B. Hunt Transport Services (NASDAQ:JBHT) and Hub Group , Inc. (NASDAQ:HUBG) from its Tactical Underperform List. The decision follows the assessment of the companies' fourth-quarter earnings and the broader outlook for the transportation sector.
Initially, both companies were added to the Tactical Underperform List due to concerns over potential fourth-quarter misses and downward revisions for 2024 estimates. Evercore ISI's broader Transports preview, released on January 4, pointed to soft December freight trends and anticipated underperformance for the sector. However, the recent earnings reports have led to a change in perspective.
J.B. Hunt surpassed fourth-quarter expectations and demonstrated strong volume growth, which is considered a positive indicator for potential pricing strength in the future. Since the beginning of the year, J.B. Hunt's stock has outperformed the transportation sector, leading Evercore ISI to acknowledge that its initial tactical view was incorrect.
Hub Group also exceeded fourth-quarter consensus expectations. Despite a guide for 2024 that suggests a lower-than-expected outlook, Evercore ISI maintains a positive stance on the stock. The firm anticipates that intermodal transport will offer volume growth opportunities and expects pricing to stabilize, with a likely upturn in the second half of 2024.
"We continue to believe that intermodal provides share gain volume opportunities and that pricing is set to bottom shortly, with a 2H24 inflection likely. Thus, we retain Outperform ratings on both stocks," said Evercore ISI analysts.
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