Werner (WERN, Outperform) revenue increased 7 percent year over year, driven by solid core freight demand, gainful pricing conditions for truckers and increase in the asset-light units. The earnings $0.35 per share was in-line with consensus while revenue came in $542.1 million, which has beaten our estimates by $18 million. Value added services revenue increased by 10%, thanks to, growth at Werner Global Logistics, modest intermodal and truck brokerage activity growth due to stretched truck capacity.
Trucking revenue (before fuel surcharges) increased by 4 percent and enhanced revenue trends reveals 3% growth in utilization and 2% growth in pricing. Following commentary, we upgrade Werner’s stock rating to ‘Outperform’ with cut in target price to $29 from our previous $30. Werner is trading at $25.29 currently which is roughly 17 times of our 2014 EPS estimate.