Industrials

Report by Abacus Research

Under its new CEO, CHRW has implemented a lean, AI-enabled operating model that has enabled the company to grow earnings despite struggling topline growth. Abacus expects EPS to average ~19% CAGR over the next 3 years, even without any help from a cyclical recovery, highlighting exceptional operating leverage and incremental margins of ~100%. Importantly, the demand environment is unlikely to worsen without a severe recession, hence any cyclical upside is mostly a free option. If investors gain confidence that high incremental margins are sustainable and CHRW is once again a structural share gainer, Abacus believes the stock can continue to re-rate higher.

Communications

Report by Gordon Haskett Research Advisors

Freight spinoff? - Bobby Mollins was not surprised to hear that management is considering its options having published several bullish notes on UBER’s freight business over the past ~20 months. He thinks an IPO next year is the most likely outcome and it could be worth $5bn. Bobby uses CH Robinson and XPO as comps and runs a valuation estimate based off of revenue for 2022-24E. He remains bullish on UBER as a company that continues to further engrain itself in the everyday lives of consumers. His TP is $48 (45% upside).