The Zacks Analyst Blog Highlights: Con-way, Covenant Transportation Group, Old Dominion Freight Line, MannKind and Sanofi
CHICAGO, Sept. 29, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Con-way Inc. (NYSE:CNW-Free Report), Covenant Transportation Group Inc. (Nasdaq:CVTI-Free Report), Old Dominion Freight Line Inc. (Nasdaq:ODFL-Free Report), MannKind Corporation (Nasdaq:MNKD-Free Report) and Sanofi (NYSE:SNY-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Friday's Analyst Blog:
3 Stocks Trucking to Bigger Profits
An improving U.S. economy, substantial surge in manufactured and retail goods, and a sharp rebound in many end markets are expected to fuel the future growth of the Trucking industry.
Truck transport is a "derived demand" industry -- demand for truckers is tied to the demand for the products that trucks haul. Therefore, trucking serves as a barometer of the U.S. economy, representing 69% -70% of tonnage carried by all modes of domestic freight transportation.
Momentum to Continue
The U.S. trucking industry has been witnessing a gradual improvement in 2014. As the U.S. economy continues to grow, demand for carriage also becomes robust and the momentum is expected to sustain in the long-run. Trucks in the U.S. are responsible for the majority of freight movement over land, and form a vital part of the manufacturing, transportation and warehousing industries.
Meanwhile, American Trucking Associations (ATA), the main industry trade group, declared that its advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 1.6% in August 2014, following a gain of 1.5% in July. In August, the index equaled 132.6 (2000=100) compared with 130.5 in July. The August 2014 index was a record-high, surpassing November 2013 index of 131.0.
The SA index in August was up 4.5% year over year. Year-to-date, tonnage is up 3.1% compared with the same period of the prior year. Importantly, the equipment finance activity increased 13% year-over-year in August 2014. This is a key indicator for stronger transportation and construction demand, which bodes well for the trucking industry.
Our Picks
The ATA has expressed its confidence that the trucking tonnage will continue to grow in the second half of 2014. At this stage, we believe investors should choose stocks which carry a favorable Zacks Rank to cash on future growth opportunities. Taking these factors into account, we present three Zacks Rank #2 (Buy) stocks for investors to consider:
Con-way Inc. (NYSE:CNW-Free Report): The company is a leading freight transportation and logistics service provider with businesses in less-than-truckload and full truckload freight services, brokerage, warehousing, supply chain management and trailer manufacturing.
For fiscal 2014, the Zacks Consensus Estimate for earnings stands at $2.37, indicating year-over-year growth of 42.64%. Notably, the Zacks Consensus Estimate for earnings increased 20 cents over the last 60 days. Con-way has also witnessed a positive average earnings surprise of 8.88% in the last four reported quarters. For fiscal 2014, the Zacks Consensus Estimate for total revenue stands at $5,804 million, up 6% year over year.
Covenant Transportation Group Inc. (Nasdaq:CVTI-Free Report): The company is a truckload carrier that provides just-in-time and other premium transportation service for customers throughout the U.S. Covenant Transportation offers freight brokerage services directly as well as through freight brokerage agents, along with less-than-truckload consolidation and accounts receivable factoring services.
For fiscal 2014, the Zacks Consensus Estimate for earnings is pegged at 82 cents, reflecting year-over-year growth of a whopping 134.29%. The earnings estimate has gained 22 cents over the last 30 days. The company has also witnessed a positive average earnings surprise of 11.91% in the last four reported quarters.
Old Dominion Freight Line Inc. (Nasdaq:ODFL-Free Report): Being an inter-regional and multi-regional motor carrier, the company primarily provides less-than-truckload shipments of general commodities, including consumer goods, textiles and capital goods to a diversified customer base.
For fiscal 2014, the Zacks Consensus Estimate for earnings stands at $2.96, indicating year-over-year growth of 23.64%. Meanwhile, the Zacks Consensus Estimate for earnings increased 12 cents over the last 60 days. Old Dominion has also witnessed a modest positive average earnings surprise of 1.39% in the last four reported quarters. For fiscal 2014, the Zacks Consensus Estimate for total revenue stands at $2,756 million, up 18.23% year over year.
MannKind and Sanofi Complete Afrezza Collaboration Deal
MannKind Corporation (Nasdaq:MNKD-Free Report) has been in search of a suitable partner ever since the FDA cleared Afrezza inhalation powder for the improvement of glycemic control in adults suffering from diabetes mellitus in Jun 2014. In Aug 2014, MannKind finally ended its search when it announced a worldwide agreement with Sanofi (NYSE:SNY-Free Report) on Afrezza (read: MannKind Enters into a Global Deal with Sanofi for Afrezza).
Earlier in the week, MannKind announced that it has completed the above deal with Sanofi. The exclusive collaboration and licensing agreement between MannKind and Sanofi is for the development and commercialization of Afrezza.
As per the deal, Sanofi is responsible for commercial, regulatory and development activities pertaining to Afrezza across the globe. The companies also inked a supply agreement according to which MannKind will manufacture Afrezza at its manufacturing facility in Danbury, CT. Shares of MannKind had gained significantly after striking the partnership deal with Sanofi.
The completion of the deal follows the U.S. Federal Trade Commission's review of the transaction under the Hart-Scott-Rodino Act. It also follows the completion of documentation for the $175 million loan facility provided by Sanofi related to the agreement. MannKind will receive a $150 million upfront payment shortly.
Our Take
We are encouraged by MannKind's decision to choose Sanofi as a partner for Afrezza. Given Sanofi's significant experience in marketing diabetes products, Afrezza is in safe hands. We expect investor focus to remain on the performance of Afrezza following its launch, which is expected in early 2015.
MannKind carries a Zacks Rank #3 (Hold).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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