JB Hunt (JBHT) drops on a rare warning
JB Hunt (JBHT) fell more than 11% after a rare warning. It expects third-quarter earnings to fall 5 to 10% from the second quarter. Fuel prices are the main squeeze, creating a roughly $10 million headwind versus Q2. Driver-related labor costs could add another $25 million in sequential costs, tied to recruiting and keeping drivers, onboarding, training, and signing bonuses.
Intermodal demand is very strong. A shortage of truck drivers is limiting highway capacity, which pushes labor costs up. That same tight trucking capacity is a plus: it gives JB Hunt more pricing power. Coming into today the stock was an outperformer both year to date and year over year, so this is a reset of a valuation that had run up over the past year.
Truist turns cautious on homebuilders
The XHB homebuilder ETF traded higher today, but Truist grew more cautious across the group. Lennar (LEN) reports after the bell today. Truist cut its Lennar price target to 75 from 80 and kept a hold ahead of the results. Lennar came in down more than 20% year to date and about 40% year over year. Rolling recessions are hitting housing, and elevated mortgage rates near 7% keep the pressure on. Mortgage applications were weak today.
The cuts went across the group:
- KB Home (KBH): target trimmed to 55, hold.
- DR Horton (DHI): target lowered to 140 from 150, hold. It has scale and a broad geographic footprint, but elevated mortgage rates lie ahead.
- PulteGroup (PHM): target lowered to 136 from 145, buy rating. Truist sees relative strength versus peers and asks whether Pulte can keep offsetting housing pressure through pricing, volume, and efficiency.
- Meritage Homes (MTH): downgraded to hold from buy, target lowered to 72 from 80.
Morgan Stanley starts Expedia at underweight
Morgan Stanley began coverage of Expedia (EXPE) with an underweight rating and a $235 price target. Shares fell 2% to around 287, so the target implies downside from here. The stock had come in with year-over-year strength, while year to date it barely moved.
The main worry is that Expedia may be losing momentum with travelers. Its monthly active users are flat, while Booking (BKNG) and Airbnb (ABNB) posted double-digit user growth. Expedia is not growing its audience as fast as rivals. It leans heavily on chain hotels and airline bookings, which Morgan Stanley thinks competitors can pull from more easily, while Airbnb has differentiation and is also pushing into hotels. This bearish call follows other calls that were more bullish, and Expedia's year-over-year performance has been strong.
