Markets & Finance

CSFB Downgrades Roadway to 'Neutral'

CS First Boston downgraded Roadway (ROAD) to neutral from outperform.

Analyst Gary Yablon says he downgraded the trucking and transportation company for two main reasons: Roadway is closing in on his target price, and he believes it's a better move for investors to watch Roadway build its next-day delivery portfolio from the sidelines -- considering the disappointing performance at New Penn, the company's next-day ground service delivery unit.

Yablon says New Penn turned in a very weak quarter with an operating ratio of 94.6%. Even with unfavorable weather costing Roadway 200 basis points of margin, the results were still below what he expected. Although New Penn is not a key earnings per share driver, he thinks it will be more important as Roadway's next-day segment bulks up.

Yablon sees $3.53 2003 earnings per share, and $4.30 for 2004. He has a $42 target.

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