Bear Stearns upgrades freight transportation company Pacer International (PACR) to outperform from peer perform.
Analyst Edward Wolfe believes the timing is right for investors to purchase Pacer after a year of inconsistent wholesale and weak retail results. He notes Pacer was up 4% since last April, vs. a 7% gain in the S&P 500.
He says his outlook for the wholesale unit improved on the back of strong pricing and volumes. He does not believe a quick fix is needed in the retail business for the company to beat earnings expectations for the next several quarters. Any signs of life (not in his projections) in retail would add a considerable upside.
Wolfe expects strong free-cash-flow generation to continue de-leveraging its balance sheet. He sets a $30 target.