Ahead Of The Bell: Hub Group Downgraded

HARTFORD, Conn. (AP) — An analyst downgraded Hub Group Inc. shares Tuesday and cut his profit estimates after the transportation logistics company reduced its first-quarter earnings estimate to well below Wall Street expectations.

Analyst Todd C. Fowler of KeyBanc Capital Markets downgraded the Downers Grove, Ill., company to "Hold" from "Buy." He cut his first-quarter estimate to 18 cents per share, down from 25 cents.

Monday, Hub Group said it expects to earn 15 cents to 20 cents per share for the quarter, including about $800,000 in severance costs as part of a previous restructuring. Chief Executive Dave Yeager cited the impact of the recession.

Analysts surveyed by Thomson Reuters expect earnings to be 27 cents per share.

Fowler said in a note to investors he would take a more positive view of Hub Group when the economy improves or the company takes actions that would boost operations.

He praised the Hub Group's strong financial position that he said is more than $2 per share net cash and management's focus on the company's operations, but "would prefer some semblance of improving freight demand or emergence of a catalyst" such as acquisitions before becoming constructive.

Truck and other transportation volumes remained depressed two-thirds into the quarter "with meaningful improvement" this month, Fowler said. However, Hub Group indicated that declines in volumes and truck brokerage revenue are in line with industrywide trends, he said.