Aug 6 (Reuters) - Shares of Pacer International Inc PACR.O fell as much as 20 percent on Thursday, a day after the transportation and logistics provider posted a second-quarter loss, hurt by a weak freight market.
“Execution risk remains, as Pacer migrates away from a wholesale-oriented model toward once more retail-centric, crucial to its long-term strategic plan,” Robert W. Baird analyst Jon Langenfeld wrote in a note to clients.
Langenfeld, who kept his “underperform” rating on the stock, said the company’s second-quarter results do not address the expiration of Pacer’s 2011 contract with its primary rail partner, Union Pacific Corp (UNP.N).
“UNP appears to have little appetite to renegotiate ahead of expiration, given its series of recent moves to diversify away from Pacer’s wholesale contract, we see Pacer’s competitive position as increasingly challenged,” Langenfeld said.
Pacer posted a loss of 21 cents a share that came in line with market estimates, but said it expects to return to positive cash flow and earnings during the second half of 2009.
Langenfeld said Pacer would struggle to return to profitability until 2010, given execution risks and pressures from the external environment.
Stifel Nicolaus also cut its price target on the stock to $5 from $7. Shares of the company were down 11 percent at $2.59 in morning trade on Nasdaq. They touched a low of $2.34 earlier in the session. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Ratul Ray Chaudhuri)