Tuesday, KeyBanc Capital upgraded Celadon Group Inc. (CLDN) shares to Buy from Hold with a price target of $11. The brokerage increased its 2009 EPS estimate to $0.18 from $0.14, and its 2010 EPS estimate to $0.40 from $0.30.
The brokerage upgraded Forward Air Corp. (FWRD) shares to Buy from Hold with a price target of $27. The brokerage maintained its 2009 EPS estimate of $0.52, and its 2010 estimate of $0.90.
Analyst Todd Fowler upgraded CLDN stock to Buy on improving asset-utilization trends and cost reduction initiatives. Loaded miles have improved sequentially during the quarter, trending flat to up year-over-year over the past several weeks, with a meaningful pick-up in the last two to three weeks.
The analyst anticipates these trends will favorably impact asset-utilization compared to his prior estimates. Reduced starting driver pay and modified driver bonus awards should reduce driver pay by $0.03 per mile by June 2010, while reduction in non-driver personnel should result in about $2.5 million ($0.05-$0.08 per share) of annual savings.
The analyst upgraded FWRD stock to Buy on stabilizing volumes, improving pool distribution performance and potential benefits from further cost reduction initiatives (overhead reduction, lease renegotiations), and establishing a price target of $27.
The analyst said that airport-to-airport revenue declines second quarter of 2009 to-date are comparable with first quarter of 2009 as the rate of year-over-year decline in tonnage has slowed, but yield has deteriorated.
The analyst noted that performance in Forward Air Solutions segment is benefiting from an incremental $12 million of annual revenue awarded in first quarter of 2009, and the reduction of $1 million in annual overhead at the end of May. Segment operating margins could be mid-single digits in fiscal 2009, compared to the analyst's current 1.3% estimate.
The analyst added that FWRD has successfully renegotiated lease rates for several of its facilities (the majority of its 85 terminal locations are leased), which should benefit lease expense during second half of 2009 and into 2010. The analyst's current estimates assume lease expense will increase 19% in 2009 and 5% in 2010.
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