NEW YORK (AP) -- Shares of Universal Truckload Services climbed in Thursday afternoon trading as a Citi analyst started coverage of the trucking brokerage firm with a "Buy" rating, citing its acquisition of LINC Logistics Co.
THE SPARK: Christian Wetherbee of Citi Investment Research initiated coverage of Universal Truckload with a "Buy" rating and $35 price target.
THE BACKGROUND: Universal Truckload announced in July 2012 that it was buying LINC in a stock-for-stock deal valued at about $335 million, including debt. LINC provides third-party logistics services. The transaction closed in October of that year.
THE ANALYSIS: Wetherbee said in a client note that the LINC deal was "transformational" for Universal Truckload, yet a bit misunderstood.
"We believe LINC's core business of value added and dedicated supply chain logistics is unique among public asset light companies and should provide a solid blend of growth in desirable end markets, high margins, cash flow and returns," he wrote.
Wetherbee said that he believes very little of the true potential of the combined company is priced into the stock currently.
A representative for Universal Truckload said the company doesn't comment on analyst reports.
SHARE ACTION: Universal Truckload Services Inc.'s stock rose $1.16, or 4.5 percent, to $26.88 in afternoon trading. The shares have traded between $14.46 and $29.99 over the past year. Year to date, the stock is up 41 percent.