J.B. Hunt Transport Services (JBHT) is expected to continue to outperform peers despite a year-to-date rally in its stock amid favorable industry trends, Deutsche Bank said Thursday.
The transportation and logistics company's shares have jumped nearly 46% so far this year. The stock is up "an enviable" 100% since the company's third-quarter earnings call in October and better than all its closest transportation peers, Deutsche Bank analyst Richa Harnain said in a note to clients.
"Despite this impressive outperformance, we continue to see strong upside potential ahead," Harnain said.
The company's shares were up 1% in Thursday afternoon trade.
The price gap between intermodal and all-highway shipping solutions is an "unprecedented" 35%, which could be a "game-changer" for J.B. Hunt, according to the note.
"By some measures, such a gap between the two offerings has never been wider," Harnain said. "We believe trends explaining the gap (rising fuel plus capacity tightness) are sustainable, and could finally unlock intermodal's long-awaited secular growth, potentially doubling its market size over the coming years."
Energy prices have surged due to supply disruptions caused by the Middle East conflict.
A "record-breaking" 60% of shippers have recently moved to rail from truck, Deutsche Bank said, citing Journal of Commerce data from journalist Ari Ashe's intermodal scorecard survey.
"We think (J.B. Hunt) is best positioned to benefit from such a trend," Harnain said. "Beyond the obvious reasons, our recent deep dive has brought to light several 'under-the-radar' elements of the (J.B. Hunt) story that make its future even more compelling."
In April, the company posted better-than-expected first-quarter results as it recorded revenue growth in most of its business segments amid robust demand for its service offerings.
Price: $282.69, Change: $+2.64, Percent Change: +0.94%
