CIBC Capital Markets reiterated its outperformer rating on the shares of TFI International (TFII, TFII.TO) while raising its price target to US$162 from US$134 after the company reported its first-quarter results.
The trucking and logistics company reported Q1 results that were "ahead of expectations" and provided Q2 adj. EPS guidance "comfortably ahead of expectations", said CIBC.
"Within TFII's LTL (less than truckload) segment, the company highlighted a clear sequential inflection in LTL volumes as the quarter progressed, with January shipments down ~10% Y/Y, February shipments flattish, and then turning positive to up ~8% Y/Y in March and holding at similarly strong levels in April," noted CIBC.
This reflects better operating conditions following early-quarter weather disruptions, said CIBC.
"Importantly, revenue per shipment also stabilized into April (roughly flat Y/Y), an improvement from down low-single digits in March, suggesting incremental volume has not come at the expense of pricing discipline," said CIBC. "TFII was also able to put through GRI in mid-March, but this accounts for just 25% of LTL shipments."
TFII is also pursuing other strategic pricing initiatives including customer-specific pricing for its 3PL customer, noted CIBC and said that this suggests TForce Freight (TFF) is beginning to see both pricing and volume momentum which are "key drivers for U.S. LTL OR to fall to below 90%."
"The key takeaway from TFII's Q1 results and earnings call was that it saw strong momentum exiting the quarter," said CIBC. "We have raised our earnings estimates to reflect TFII's commentary with our price target moving from (US)$134 to (US)$162. We keep our Outperformer rating."
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