Trucking companies will soon see conditions improve as prices catch up to rising costs and other pressures, an analyst said Friday, upgrading shares of several companies in the sector.
Robert W. Baird's Jon Langenfeld raised less-than-truckload shippers Con-Way Inc. and Old Dominion Freight Line Inc. to "Outperform" from "Neutral" in a note to investors.
Less-than-truckload shippers _ which fill their trucks with freight from a variety of sources and tend to travel shorter distances _ are seeing prices improve already, Langenfeld said, while a "pricing Renaissance" for the broader sector could come as soon as 2009.
Record-high fuel prices, lower demand and a round of bankruptcies have battered the trucking industry recently. In May, privately held Jevic Transportation Inc. shuttered in late May after 27 years in business.
Langenfeld predicts those challenging conditions will persist for the rest of the year and into 2009 and he cut his earnings estimates for the trucking companies he covers. But he predicts an upcoming recovery and raised several of the companies' price targets.
For Old Dominion, he raised his target to $38 from $32, implying a 38 percent gain from Thursday's close of $27.44.
His new target for Con-Way is $61, raised from $52. That implies a return of 33 percent from a $45.99 close.
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