On Friday, Goldman Sachs reiterated its Buy rating and $188.00 price target for J.B. Hunt Transport Services (NASDAQ:JBHT). According to InvestingPro data, the stock is currently trading slightly above its Fair Value, with analyst targets ranging from $161 to $211. Following the release of the company's fourth quarter earnings, Goldman Sachs analyst Jordan Alliger commented on the results, which exceeded expectations.
J.B. Hunt reported an operating earnings per share (EPS) of $1.66, surpassing both Goldman Sachs and FactSet consensus estimates of $1.56 and $1.61 per share, respectively. This outperformance was primarily attributed to a slightly higher intermodal margin than anticipated, coming in at 7.3% versus the forecasted 7.0%. The company maintains a GOOD overall financial health score on InvestingPro, with solid profitability metrics despite a 7% revenue decline in the last twelve months.
Despite the positive fourth quarter results, J.B. Hunt indicated during its earnings call that it expects a 20%-25% decrease in total company EBIT for the first quarter of 2025. This projected decline is significantly steeper than the approximate 10% drop Goldman Sachs had incorporated into its model.
InvestingPro data shows that 10 analysts have recently revised their earnings estimates downward, while the company trades at a relatively high P/E multiple of 33.7x. The majority of the anticipated reduction in EBIT dollars is expected to affect the intermodal segment the most, followed by the Dedicated segment.
The analyst expressed disappointment with the forecasted seasonal downturn in the first quarter, but remains optimistic for the latter half of the year. Goldman Sachs anticipates truck contract rates to begin increasing in the first half of 2025, which is expected to subsequently lead to an uplift in intermodal rates in the second half of the year, albeit with a typical lag. The firm predicts that this rate inflection will result in improved year-over-year intermodal margin and profitability.
J.B. Hunt's fourth quarter performance, which included an adjustment for a $16 million asset impairment charge in its brokerage operations, or $0.13 per share, was noted as a contributor to the better-than-expected earnings. Despite the near-term challenges projected for the first quarter of 2025, Goldman Sachs maintains its positive outlook for J.B. Hunt's stock performance going forward.
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