NEW YORK (AP) -- Shares of Arkansas Best reached a multiyear high on Monday as a Raymond James analyst upgraded the trucking company's rating, saying it could see possible savings from a new labor agreement and network optimization efforts.
THE SPARK: Analyst Arthur Hatfield raised his rating on Arkansas Best Corp. to "Strong Buy" from "Market Perform" and established a $46 price target.
THE ANALYSIS: Hatfield says that Arkansas Best's service centers are generally smaller than its rivals, so the company could potentially consolidate some of them. If this was done for 10 to 100 terminals, the company could achieve an estimated $5 million to $90 million in annual savings, the analyst explained.
With a new labor agreement likely to be approved soon, Hatfield says that the deal should "result in improved operational flexibility and an improved cost structure."
The analyst believes that wage and vacation concessions could bring savings of more than $30 million in 2014 and up to $50 million or more by 2017.
A representative for Arkansas Best declined comment.
SHARE ACTION: The stock gained $1.75, or 7 percent, to $26.76 in afternoon trading. It touched $27.27 earlier in the session, the highest level since July 2011.