01:04 PM EDT, 08/01/2024 (MT Newswires) -- Expeditors International of Washington's ( EXPD ) earnings are due to benefit from a sharp rise in ocean container shipping rates, UBS said in a note emailed Thursday.

Oceanfreight contributed 25% towards the company's gross revenue in 2023 and is expected to account for 33% of revenue in 2024 as shipping rates soared 250% from the end of 2023, the investment firm said.

As a result, UBS raised its earnings-per-share estimate to $1.42 from $1.26 for Q2; to $1.52 from $1.17 for Q3; and to $1.32 from $1.19 for Q4. It also increased its full-year 2024 EPS forecast to $5.43 from $4.79.

Meanwhile, the firm raised its 2025 EPS estimate to $5.69 from $5 even as it expects ocean container shipping rates to normalize during the year.

UBS acknowledged that its expectation of EPS growth was in "contrast to the cyclical weakness experienced by many of the transports levered to domestic freight activity," but said its rationale was based on expectations that the company's air and ocean volumes would grow, according to the note.

UBS upgraded the stock to neutral from sell and raised its price target to $137 from $95.

Expeditors International shares were up 1.2% in recent Thursday trading.

Price: 126.26, Change: +1.44, Percent Change: +1.15