June 3 (Reuters) - At least two analysts said Hub Group Inc (HUBG.O) is transitioning to Union Pacific Corp (UNP.N) as its primary Western intermodal rail carrier from Burlington Northern Santa Fe Corp BNI.N, a move that should benefit the freight management company.
Hub’s shares jumped 15 percent to $23.01 in morning trade, making them one of the top percentage gainers on Nasdaq.
Robert W Baird analyst Jon Langenfeld said the transition is expected over the next several months, and as a result of this deal, Hub will migrate 8,400 of its containers currently on Burlington’s network over to Union Pacific.
Following the transition, roughly 90 percent of Hub’s boxes will be on Union Pacific with the remaining on Burlington, the brokerage said. Prior to the migration, 60 percent of Hub’s boxes were run on Burlington and 40 percent on Union Pacific, it added.
A Hub Group official was not immediately available for comment.
KeyBanc Capital Markets, which raised Hub to “buy” from “hold,” said the company will benefit from reduced purchased transportation costs and share gains from operational or contractual issues related to Pacer International Inc PACR.O.
Baird’s Langenfeld downgraded Pacer by a notch to “underperform” and said the expanded Union Pacific-Hub relationship further weakens its competitive position.
He, however, said J.B. Hunt Transport Services Inc (JBHT.O) and private carrier Schneider will benefit from one less intermodal competitor running on Burlington.
“Further, the weakened competitive position of Pacer will ultimately help the overall supply/demand balance among larger intermodal providers,” Langenfeld said.
Pacer shares slumped 15 percent to $2.51 in morning trade. The stock was the fourth biggest percentage loser on Nasdaq. (Reporting by A.Ananthalakshmi in Bangalore; Editing by Deepak Kannan) ((firstname.lastname@example.org; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: email@example.com))