J.B. Hunt (JBHT) Retests Highs After Analyst Upgrade

J.B. Hunt Transport Services, Inc. (JBHT) shares rose more than 4% during Wednesday's session after Citi upgraded the stock to Buy with a $165 price target.

Citi analyst Christian Wetherbee sees a multi-year earnings growth cycle similar to 2012-2015, which could result in 80% to 100% earnings growth over three years. In addition, the analyst believes that the emerging segments could swing to profitability and power out-year growth.

The freight industry has seen a V-shaped recovery over the past few months. In October, the Cass Freight Index increased 2.4% over the prior year in a dramatic improvement over the prior month's 1.8% decline. Rail volumes also improved during October.

From a technical standpoint, the stock moved to retest prior highs and trendline resistance. The relative strength index (RSI) moved toward overbought territory with a reading of 65.05, while the moving average convergence divergence (MACD) could see a bullish crossover. These indicators suggest that the stock has more room to run before consolidation.

Traders should watch for a breakout from trendline resistance over the coming sessions. If the stock breaks out, traders should watch for a move toward fresh highs. If the stock fails to break out, traders could see a move toward the 50-day moving average at $133.34 or a move toward reaction lows of around $119.22, although that seems less likely to occur.

The Bottom Line

J.B. Hunt shares moved sharply higher during Wednesday's session after Citi upgraded the stock to a Buy with a $165 price target. Analyst Christian Wetherbee believes that the company could benefit from a multi-year earnings growth cycle. Traders should watch for a breakout from trendline resistance, although the RSI is reaching overbought levels.

The author holds no position in the stock(s) mentioned except through passively managed index funds.