Monday, Credit Suisse upgraded Con-Way, Inc. (CNW) shares to Neutral from Underperform and increased its price target to $47 from $23. The brokerage raised its 2009 EPS estimate to $1.42 from $0.37, its 2010 estimate to $3.32 from $0.96, and its 2011 estimate to $4.00 from $1.79.
Analyst Ceraso said that his rating change stems from much stronger than expected second quarter results, which clearly demonstrate that CNW's business model simply has more earnings power than he previously appreciated.
The analyst noted that more importantly, while the analyst still holds his non-consensus view that Yellow might avoid bankruptcy, that may not be the key factor in judging the investment merits of CNW. Con-Way has shown (in second quarter) that even modest share gains may be enough to drive stronger earnings and a better stock price. In other words, YRCW doesn't necessarily need to disappear, it just needs to keep shedding customers.
The analyst has revised his forecasts to factor in improved tonnage assumptions, and also to give the company more credit for cost savings, which he believes are sustainable for the near-term.
Currently, CNW is up $2.34 or 5.67% and trading at $43.60.
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