Shares Of Landstar System Fall After Downgrade

NEW YORK (AP) — Shares of trucking and logistics company Landstar System Inc. fell Monday after a Wachovia analyst downgraded the stock, saying weak transportation demand should constrict growth in the near future.

Analyst Justin Yagerman cut the stock to "Market Perform" from "Outperform," noting the stock is currently too expensive. Shares have gained 32 percent since March 9, while the S&P 500 has lost 27 percent in the same timeframe.

Looking forward, Yagerman expects weak construction, manufacturing, automotive and transportation demand to continue to constrain earnings, despite the benefit of the company's increased infrastructure investments and the structure of its overall business model. He predicts earnings won't likely improve until these segments begin to pick up.

"While Landstar's asset-light model has insulated the company from the full brunt of the cyclical downturn in the economy, we believe earnings will continue to be constrained throughout most of 2009 as revenue likely declines year over year," he wrote in a note to clients.

Yagerman trimmed his below-consensus profit estimates for this year by 1 percent and next year by 4 percent. He now expects a 2009 profit of $1.60 per share. Analysts surveyed by Thomson Reuters, on average, predict $1.70 per share.

The company will announce first-quarter earnings on Wednesday.

Shares of Landstar dropped $1.96, or 5.4 percent, to $34.33 in midday trading. The stock has ranged between $27.21 and $59.21 in the past year.