Hub Group to benefit from railroad consolidations, upgraded at Raymond James to Outperform

[White trucks driving on the highway winding through forested landscape in autumn colors at sunset]
Milos-Muller

Shares of Hub Group (NASDAQ:HUBG [https://seekingalpha.com/symbol/HUBG]) are getting a lift thanks to an upgrade at Raymond James attributed to favorable trends in the transportation sector and as the merger between Union Pacific (UNP [https://seekingalpha.com/symbol/UNP]) and Norfolk Southern (NSC [https://seekingalpha.com/symbol/NSC]) will feed demand for intermodal freight.

“In our view, Hub Group is uniquely positioned to benefit from the UNP-NSC merger as they are the largest [intermodal marketing company] that has both rails as their primary partners affording network density synergies and outsized intermodal conversion opportunities,” Raymond James’ Patrick Tyler Brown said in his note to clients.

The broader picture for the freight industry is muddier given the overhang from tariffs, but the resumption of rate cuts will be a positive for the group, although Brown cautions that it will take time for lower rates to manifest into freight moves for the depressed auto and housing sectors.

At the same time, shipping rates could see some upward pressure as the supply of truckers will be impacted by legislative changes, namely, English Language Proficiency enforcement and the crackdown on non-domiciled CDL holders.

The Federal Motor Carrier Safety Administration estimates that under the new restrictions, 6K drivers would qualify to be a non-domiciled CLD holder.

“Together, these items could combine to take out a structural low-to-mid single digit percentage of the TL driver base by the end of 2026,” Brown adds.

Coupled with the benefits from railroad consolidation, Brown upgrades Hub Group to Outperform from Market Perform to reflect valuation levels that appear to be disconnected versus peers and from developments that favor the logistics management company. A $40 price target represents 19% upside from Monday’s close.

MORE ON HUB GROUP

* Hub Group: Upside Requires Booming Profitability [https://seekingalpha.com/article/4818043-hub-group-upside-requires-booming-profitability]
* Hub Group, Inc. 2025 Q2 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4807901-hub-group-inc-2025-q2-results-earnings-call-presentation]
* Hub Group, Inc. (HUBG) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4807900-hub-group-inc-hubg-q2-2025-earnings-call-transcript]
* Hub Group raises cost savings target to $50M while signaling early West Coast peak and strategic acquisitions [https://seekingalpha.com/news/4476825-hub-group-raises-cost-savings-target-to-50m-while-signaling-early-west-coast-peak-and]
* Hub Group Q2 2025 Earnings Preview [https://seekingalpha.com/news/4474647-hub-group-q2-2025-earnings-preview]